Headless chicken government with a strong liver
As in Ionescu’s absurd theatre, our head still believes it is in full control of the body. Yes, we have a chicken-like government with an alien head, and there could be no better poof of the argument than the weekly party - government assessment meetings: every week the ‘head’, named Liviu Dragnea, is trying to check if the ‘body’, the Mihai Tudose government, is still his.
One of the principles of a sound economic policy is not to rock the fiscal boat without a good and pressing reason. But what does our headless chicken government do? It announces a fundamental shift in taxing policies by replacing the 14-year-old tried and trusted flat tax on profit with a three-tier turnover tax. Newly installed Finance Minister Ionut Misa’s angelic serenity when announcing the planned changes was priceless. The poor guy didn’t even grasp the magnitude of the economic earthquake he was announcing.
As if that was not bad enough, three sentences later, Misa candidly made public the mother of all secrets, the government’s intention of taking control over the second pillar of the pension system. One hour later, the Romanian currency lost three percent of its value, while the Bucharest Stock Exchange took a nosedive with companies losing hundreds of millions. Interestingly enough, earlier this year, the Financial Supervisory Authority (ASF) fined the head of a private pensions company for having notified its clients that the government was contemplating the idea of taking control over the private second pillar. I would demand to be reimbursed the fine now.
Just days later, amid a tsunami of protests from the business community, the chicken’s ‘head’ reacted erratically, firstly by advising the ‘body’ to work on its “political maturity”, a polite way of saying “next time, keep your damn mouth shut!”, and later announcing that such measures would not be implemented without proper impact studies.
Let’s just recall that less than six months earlier, the government was announcing a similarly radical fiscal plan, to implement an American-style household income tax with the help of “35.000 tax specialists” that would have had the unviable job of advising people on how to “optimise income tax” while being paid by the State.
Then it was the turn of Labour Minister Ms. Olguta Vasilescu to hit hard once more, promising that, come January 1, 2018, the minimum wage in the public sector would reach 2,000 lei, up from the current 1,450 lei. Just six months ago, the minimum wage went up from 1,200 lei to 1,450, but nobody bothered to see if such an increase is justifiable, by a matching increase in productivity, or if it is economically viable. To top it up, Ms. Vasilescu also talked about a “solidarity tax” to be levied on high wages. No, no, no, says the chicken’s ‘head’, no one has ever talked about a 2,000-lei minimum wage in 2018, it was a fake piece of news that has been rolled over and over by the enemies in the press, in another hiccup that sent the government ‘body’ off the wall yet again.
As for the “unified wage system” that promised milk and honey for the public sector, it has been enacted by President Klaus Iohannis, but so far only the members of the parliament are to benefit from higher salaries - the others, maybe later - while resident doctors have lost almost 670 lei from a top-up scheme put in place before.
Then we had ever-present motorway issue. Each and every member of the Romanian business community has emphasised the need for an extended motorway network – especially the need to link Pitesti and Sibiu, which would facilitate economic growth and local business development. For years, the European Union has been pressing for the Pitesti – Sibiu motorway too, but, no, Mr. Eugen Nicolicea says that the government’s priorities reside with the “salaries and pensions”, and the motorways can wait. Wait a minute, says the new Economy Minister, Ioan Fifor, we can build it using money from the miracle Sovereign Investment and Development Fund, forget the that EU transportation plan is there to cover 85 percent of the costs, we can afford to pay it all by ourselves! Really, there is nothing more to say…
Well, as a matter of fact, … in all this hallucinating, hysterical, twist-and-turn, hop-hop movement performed by our ‘headless chicken government’, there is a part that is still working properly: the liver, Sevil Shhaideh. Quietly, she has wisely and promptly fed the party apparatus with the money required to ensure the downfall of Grindeanu government. She has worked hard in order to ensure that the mayors can spend the money with impunity, without fear of being accountable to anyone. And most recently she has delivered a brand new Administrative Code that will stick the ‘head’ back onto the ‘chicken’, allowing rehabilitated former convicts to be part of or lead the government. This is probably what Prime Minister Mihai Tudose meant when he said that he had a strong liver.
One of the principles of a sound economic policy is not to rock the fiscal boat without a good and pressing reason. But what does our headless chicken government do? It announces a fundamental shift in taxing policies by replacing the 14-year-old tried and trusted flat tax on profit with a three-tier turnover tax. Newly installed Finance Minister Ionut Misa’s angelic serenity when announcing the planned changes was priceless. The poor guy didn’t even grasp the magnitude of the economic earthquake he was announcing.
As if that was not bad enough, three sentences later, Misa candidly made public the mother of all secrets, the government’s intention of taking control over the second pillar of the pension system. One hour later, the Romanian currency lost three percent of its value, while the Bucharest Stock Exchange took a nosedive with companies losing hundreds of millions. Interestingly enough, earlier this year, the Financial Supervisory Authority (ASF) fined the head of a private pensions company for having notified its clients that the government was contemplating the idea of taking control over the private second pillar. I would demand to be reimbursed the fine now.
Just days later, amid a tsunami of protests from the business community, the chicken’s ‘head’ reacted erratically, firstly by advising the ‘body’ to work on its “political maturity”, a polite way of saying “next time, keep your damn mouth shut!”, and later announcing that such measures would not be implemented without proper impact studies.
Let’s just recall that less than six months earlier, the government was announcing a similarly radical fiscal plan, to implement an American-style household income tax with the help of “35.000 tax specialists” that would have had the unviable job of advising people on how to “optimise income tax” while being paid by the State.
Then it was the turn of Labour Minister Ms. Olguta Vasilescu to hit hard once more, promising that, come January 1, 2018, the minimum wage in the public sector would reach 2,000 lei, up from the current 1,450 lei. Just six months ago, the minimum wage went up from 1,200 lei to 1,450, but nobody bothered to see if such an increase is justifiable, by a matching increase in productivity, or if it is economically viable. To top it up, Ms. Vasilescu also talked about a “solidarity tax” to be levied on high wages. No, no, no, says the chicken’s ‘head’, no one has ever talked about a 2,000-lei minimum wage in 2018, it was a fake piece of news that has been rolled over and over by the enemies in the press, in another hiccup that sent the government ‘body’ off the wall yet again.
As for the “unified wage system” that promised milk and honey for the public sector, it has been enacted by President Klaus Iohannis, but so far only the members of the parliament are to benefit from higher salaries - the others, maybe later - while resident doctors have lost almost 670 lei from a top-up scheme put in place before.
Then we had ever-present motorway issue. Each and every member of the Romanian business community has emphasised the need for an extended motorway network – especially the need to link Pitesti and Sibiu, which would facilitate economic growth and local business development. For years, the European Union has been pressing for the Pitesti – Sibiu motorway too, but, no, Mr. Eugen Nicolicea says that the government’s priorities reside with the “salaries and pensions”, and the motorways can wait. Wait a minute, says the new Economy Minister, Ioan Fifor, we can build it using money from the miracle Sovereign Investment and Development Fund, forget the that EU transportation plan is there to cover 85 percent of the costs, we can afford to pay it all by ourselves! Really, there is nothing more to say…
Well, as a matter of fact, … in all this hallucinating, hysterical, twist-and-turn, hop-hop movement performed by our ‘headless chicken government’, there is a part that is still working properly: the liver, Sevil Shhaideh. Quietly, she has wisely and promptly fed the party apparatus with the money required to ensure the downfall of Grindeanu government. She has worked hard in order to ensure that the mayors can spend the money with impunity, without fear of being accountable to anyone. And most recently she has delivered a brand new Administrative Code that will stick the ‘head’ back onto the ‘chicken’, allowing rehabilitated former convicts to be part of or lead the government. This is probably what Prime Minister Mihai Tudose meant when he said that he had a strong liver.
The interview is also available in our print edition of Business Arena.
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