Bucharest, December 30, 2024: Federația Patronală a Energie (FPE) expresses its deep concern about the recent proposal to introduce a tax of 1.5% applicable to special constructions (the so-called "pole tax"), included in the Emergency Ordinance on some fiscal-budgetary measures for the substantiation of the consolidated general budget for 2025.
FPE draws the Government's attention to the fact that this measure was proposed without a transparent consultation and without a prior social dialog with the relevant actors in the field. The Federation underlines that such initiatives go against the principles of good governance and recent promises made in the framework of the social dialogue between the Government and employers.
While FPE understands the need for the Government to adopt fiscal measures to ensure fiscal sustainability, it believes that this tax is excessive and could have a severe impact on strategic economic sectors.
FPE draws attention to some key issues to be aware of
1. Negative economic impact
The 1.5% tax on special constructions is a major tax burden that will affect the competitiveness of companies in the energy and other strategic sectors.
In an economic context already marked by instability and a lack of predictability, this measure significantly discourages investment in strategic sectors of national interest and causes companies to cut jobs and put pressure on final prices for consumers. This tax will significantly affect taxpayers who have invested heavily and in the long term (given that the tax is directly proportional to the amount of investment made).
The tax, applied retroactively on investments already made, can lead to higher prices, reduced consumption and higher inflation.
Without the possibility to pass on costs to final prices, companies will have fewer resources for development, affecting the energy transition and the green economy. The measure also aggravates the financial problems in the sector, jeopardizing energy security and causing some companies to abandon investments or even go out of business, with a negative impact on unemployment and the economy.
2. Contradiction with Romania's strategic objectives
Taxing special constructions may affect key areas such as renewable energy, natural gas production and critical infrastructure, limiting the country's ability to achieve its energy transition and sustainable development goals. Moreover, this tax violates the Offshore Stability Act.
3. Inadequate tax base
The proposal to tax on the gross value of the assets, without taking into account their wear and tear, is the wrong economic approach. FPE believes that the tax base should be the tax value remaining undepreciated, which more accurately reflects economic reality.
Assets in the construction category have the longest normal useful lives in the entire fixed asset classification catalog, with most assets in the 10-60 year range (very few asset types have a useful life of less than 10 years).
Given that the rate of 1.5% per annum is applied to the gross value of assets, it follows that a company is obliged to pay to the state budget between 15% and 90% of the value of the asset acquired for productive purposes. From this perspective, the tax is not only excessive, but is also proof that the initiators of the legislative act have not understood the impact that this measure will have on the functioning of the real economy, with disastrous effects in the medium and long term.
4. Taxation of inactive assets
Including mothballed, preserved or scrapped assets in the tax base is economically unjustified and could lead to a doubling of the tax burden for companies modernizing infrastructure.
5. Lack of transparency and social dialog
Introducing this measure without prior consultation with the business community goes against the government's commitments on transparency and social dialog, calling into question the fairness and sustainability of the proposed measure.
Requests FPE
- Reconsider the proposed tax measure in view of its negative impact on the economy.
- Initiate a real social dialog with relevant actors from industry and employers.
- Finding balanced fiscal alternatives that ensure budgetary stability without damaging economic competitiveness and investor confidence.
FPE expresses its willingness to contribute with its expertise to the formulation of a fair and sustainable fiscal policy to support Romania's economic development.
For more information, please contact us at: office@fpe.ro
