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Activity of the Parliament on October 20 – November 2, 2003

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October 20–24, 2003

To begin with it is worth considering the major events taking place on the political scenery.

Firstly, let us consider the speech delivered by Polish President, Aleksander Kwasniewski on October 23 in the Moldovan Parliament. Apart for the fact that he started and closed his speech in Romanian that garnered him a rich applauses Polish President made several remarks that are very beneficial to Moldova. Citing Molotov-Ribbentrop Pact that left victims both in Moldova and Poland, Kwasniewski stated that Poland learned a lesson from its past and that the prosperity of the country was mainly due to tolerance and open dialogue between political actors. An illustration of this were the negotiations within the Round Table that enabled a smooth transition to a new political system in Poland.

The President also stated that:

Secondly, each Parliament session is full of political declarations, both of the majority faction and opposition. Again, “Teleradio-Moldova” issue has taken center stage. Previously opposition used only to criticize the draft law on the state company liquidation, now they are openly blaming the ruling party for the poor state of affairs in the company, in particular poor financial administration of the State Company. Noteworthy, it was under the leadership appointed by the majority faction that great debts were incurred, which now are to be recovered from the state budget.

In its turn, majority faction accused opposition of politicizing the issue of Teleradio-Moldova. Several opposition members attended protest rallies staged by the company employees.

There are several reasons to believe that the state of affairs would deteriorate even further, given the approaching hearings on the state budget, approaching deadline for Russia to evacuate its troops from Transdnistria. It is to be expected that both majority faction and opposition would resort to some tough measures, however not too tough as long as Moldova holds the Presidency of the Council of Europe Ministerial Committee.

Apart from political matters, let us now consider the legal acts examined by the Parliament.

Law on Completing the Law on Notary

The law entitles registrars of the State Registration Chamber to provide several notary services free of charge, namely:

Citizens requesting the said services would have to pay just the state tax, and will be exempted from the notary fee.

Government did not endorse the draft, this refers in particular to the Ministry of Justice. Nevertheless, deputies considered that small-to-middling business would benefit of the said modifications. Also deputies claimed notaries were unjustly charging high fees for the services registrars would now provide free of charge. To put it differently, notaries opposed the draft through the Ministry of Justice where they have people lobbying their interests.

Law on exempting from VAT construction works at several museums

The law exempts from VAT construction and renovation works at the Capriana Monastery, “Badea Mior” monument in Soroca, and monument in Serpeni. Construction and renovation of those monuments is funded from donations of the legal and natural entities. Minister of Finances, thus, refuted the allegations that the said works are funded from the state budget.

It is worth mentioning that two marathons (radio, TV) were organized to raise funds for Capriana Monastery. Various donations were made, the greatest one by the Minister of Transportation (at that time electoral candidate running for the Chisinau Mayoralty), who reported that ministerial enterprises donated funds and provided construction works worth 3 million Lei. Given that the said enterprises are state owned, one may conclude that the funds also were allotted from the state budget.

Mention should be made that restoration of the Capriana Monastery was initiated by the President of the Republic of Moldova and Moldovan Church Opposition claimed restoration would be entrusted to enterprises close to the ruling party, especially to the son of the President.

Resolution on approving the National Action Plan on Human Rights

The Action Plan developed with the financial support of UNDP office in Moldova is intended to improve human rights in Moldova. It includes the following chapters:

  1. General provisions: legal framework, current state of affairs, goals and objectives, implementation, etc;
  2. Actions to be taken: adhering to relevant international structures; actions in the main fields (labor, education, environment, minorities’ and detainees’ rights, equal opportunities, etc);
  3. Perfecting national legislation in the field;
  4. Monitoring the implementation of the plan.

A number of experts are skeptical with regard to the implementation of the document, especially as there are no funds allotted. One of the suggested solutions was to apply for funding to foreign donors. However, the financial aid provided to Moldova has considerably dropped lately. It would have been more appropriate the $100,000 to be spent on the enforcement of the plan, rather than on its elaboration.

Draft law on the sample-statute of the village (commune), city (Municipality), passed in the first reading

The draft is part of the legal framework regulating local public administration. Sample-statutes of the village (commune), city (municipality) shall serve as a legal basis for the statute of the administrative-territorial units.

The statute will include specific elements distinguishing a certain locality from others, such as:

Also, the statute provides on ways administrative-territorial unit patrimony may be administered by the municipal enterprises and public institutions, i.e. concessions, rent, or lease.

Moreover the statute provides for:

Another extremely important provision stipulates that residents of the village (commune), city (municipality) shall be consulted in a referendum on the major issues for the administrative-territorial unit. Referenda, reunions and consultation of citizens, and public hearings may be held in all the localities part of the administrative-territorial unit, or only a part thereof. Citizens’ reunions shall be organized in each village — in rural areas, and in each district or street — in urban areas.

Draft law on approving the frame-regulation on establishment and functioning of local and rayon councils, adopted in the first reading

This document is also part of the acts necessary to ensure normal functioning of the newly-reformed local public administration. It consists of two chapters:

1. Establishment of councils: procedure of establishing local and rayon councils; establishment and activity of specialized commissions of the council.

2. Sessions of the local and rayon councils: responsibilities of the chair of the meeting and council secretary; conduct of sessions; procedure for drawing draft decisions; voting procedure; questions, appeals, petitions and informing councilors.

The regulation also includes an appendix providing that specialized commissions of the local and rayon councils may be established in the following fields of activity:

The regulation entitles council to establish specialized commissions in other fields as well, or to have one commission work on two or more fields.

The law provides that based on the frame-regulation local and rayon councils would develop their own regulations.

Although such regulations exist at the moment, experts believe that such a detailed specification of the local and rayon council activity is nothing but an interference in their activity and limitation of their mandate. This in itself runs counter to the international legal framework in the field.

Noteworthy, during the debates in Parliament no mention was made that the document had been submitted for the expertise of the Council of Europe.

October 27–31, 2003

In the past week debates on Law on the State Budget for 2004 took the center stage. One of the most controversial issues was the initiative to raise the land tax and cancel reduction on VAT payments on import of agricultural equipment, seeds, and raw material for medicines. Government proposed to increase the land tax and cancel reductions on VAT in order to accrue more revenues to the state budget, fact that garnered rich criticism from farmers. Opposition was quick to take advantage of this state of affairs.

To oppose the said changes, “Moldova Noastra Alliance” faction even tried to held protest rallies, fact that made the ruling party react promptly and try to calm down the spirits. First Communist deputies, and later on the President himself, suggested to preserve the current reductions to VAT and give up raising the land tax. Therefore, Government would have to seek ways to cover for the 300,000 MDL it hoped to raise thereby, which wouldn’t be an easy task especially as there are bleak predictions for foreign credits.

Apart from the Law on the State Budget for 2004, the Parliament passed other important pieces of legislation.

Law on Ratifying the Penal Convention on Corruption

The law ratified Penal Convention on Corruption, adopted by Council of Europe on June 24, 1999. In addition a declaration was adopted stating that Convention shall not have legal effect to the left of Dniester river until a complete resolution of the conflict.

Together with Civil Convention on Corruption the said document are very important pieces of legislation for the member-states as they provide practices to be employed in fighting corruption. In the general provisions, the Convention provides that Council of Europe member states fully comprehend the need to have a joint penal policy aimed at protecting the society from corruption, including via passing appropriate laws and taking appropriate measures. The provision goes on saying that corruption threatens democracy, rule of law, social equality and justice, impairs competition, hinders economic development and threatens the stability of democratic institutions and society morale principles.

The 40 articles of the Convention refer to: notions; actions to taken by each member-state; monitoring Convention enforcement; mechanisms of international cooperation, etc.

Law on Modifying Legal Acts regulating state fiscal and budgetary policy

The said law was submitted together with the Law on State Budget for year 2004. Under the Law more than 20 articles of various legal acts are to be amended. In particular, the following acts will be amended:

Law on Privatization. Amendments provide that revenues from the privatization of public patrimony shall be transferred to the state budget; revenues from the privatization of the public patrimony in the possession of administrative-territorial units shall be transferred to their budget; revenues from the sale of the patrimony of institutions funded from various budgets shall be transferred thereof; and revenues from the sale of state shares on companies undergoing privatization shall be used for covering the budget deficit.

Law on entrepreneurship and enterprises was amended so as illegal revenues incurred, by overstating production costs, profitability, sales margin, amount of construction works, and fees on the services rendered, as well as penalties set in amount equal to the revenues incurred shall be transferred to the state budget.

Law on Local Taxes was amended so as agricultural enterprises having revenues from the production and sale their own agricultural products shall not pay local taxes set by the local public administration.

A provision exempting copyright from VAT was excluded from the Law on Copyright.

Law on Road Fund was amended raising taxes for transit on national and international highways, tax on passing highways, tax for issuing authorizations, etc.

Article 6 of the Fiscal Code was amended thereby income tax and taxes payable to the road fund shall be transferred to the state budget, whereas estate tax shall be transferred to the budgets of the administrative-territorial units.

Amendments to the Fiscal Code reduce the quota on income tax, as follows: 10% for annual income below 16,200 MDL; 15% for income ranging between 16,200–21,000 MDL, and 22% for income exceeding 21,000 MDL. A quota of 20% was established for the income tax payable by legal entities.

As it was already mentioned above that deputies rejected Government initiative to cancel in 2004 the reductions to VAT on the important of certain goods as well as raise by 0.3 lei per hectare the land tax, on the grounds that the move would skyrocket the prices on agricultural and pharmacy products and would leave the farmers worse off. Experts claimed that the initiative would have allowed for a more balanced budgetary policy in the long run, however a year before elections the ruling party could not afford the luxury to take unpopular measures, regardless of their potential benefit.

Law on Changing the Deadline for Introducing Inspection before Expedition

At the recommendation of the Government deputies excluded from the law the provision stipulating that within a month of the adoption of the Law on Inspection before Expedition the Government was due to select a company to render those services.

Thereby, Parliament suspended the Law on Inspection before Expedition, however enabled Government to proceed selecting a company whenever international monetary institutions would insist on it.

Noteworthy, the failure to enforce inspection before expedition in due time was one of the reasons why IMF did not resume crediting Republic of Moldova last summer. In its turn, the move determined WB as well as other foreign donors to suspend their crediting and assistance programs for Moldova.

Law on Ratifying the second amendment to the Agreement between Republic of Moldova and “Dresner-Bank (Germany)” on surety of payment

The law ratifies the amendment to the Agreement providing for restructuring Moldovan 2 million Euro debt, thereby the first installment worth 200,000 Euro is payable by February 2004, whereas the rest of debt is payable in 2005–2007. Republic of Moldova shall pay a 6% interest rate for the restructuring.

It is worth mentioning that the credit was made to “Perfuson” joint stock venture to complete the construction of a pharmaceutical complex, however because of the incapacity of payment commencing 1999 Government surety was opened. Previously, poor management of the company was cited as one of the main causes of the incapacity of payment.

Draft law on modifying the Law on Licensing in the Field of Alcohol Production and Sale

The draft envisages an impairment of the general norms thereby the license for production, storage and wholesale of ethyl alcohol and beer shall be issued for a 3 year period, whereas the tax established in the State Budget shall be paid in installments — 1/3 each year.

Previously the cost of the license was largely debated on in Parliament and was a major issue upon the adoption of the state budget for 2003. Alcohol producers and wholesaler insisted on lowering it, however deputies viewed that it was quite reasonable as it brings quite a profit. Still the said amendment is favorable to the companies working in the field, but it might prove detrimental to the state budget.

Draft law on the modification of legal acts on the use of Russian language in patenting

The draft provides that natural entities may submit application documents either in state language or in Russian, whereas legal entities only in Russian. The modifications were necessary in order to bring the legislation in accordance with the Law on Minorities Rights.

ADEPT previously reported on the opinions of various experts claiming that while the ruling party failed to operate amendments to Constitution, so as to grant an official status to the Russian language, it succeeded in legalize Russian language in various acts such as the Law on Civil Status Acts, Law on Notary, Law on Minorities’ Rights, etc. The draft completes the string of laws aimed to prove to Russian minority that the ruling party is trying to fulfil its electoral promises, despite the internal and external opposition.

Draft law on canceling penalties and sanctions accrued by cooperative enterprises

The draft passed in the first reading envisages canceling penalties and sanctions on the debts payable by the cooperative enterprises to the national public budget (state budget and social security budget) as of January 1, 2003.

It is worth mentioning that the law was examined on the eve of the Ordinary Congress of Cooperative Societies attended by the President of the Republic of Moldova. President pledged authorities’support in boosting cooperatives. Noteworthy, previously representatives of cooperative enterprises backed up by opposition in parliament stated that the incumbent ruling intended to nationalize the property of cooperative enterprises and replace their leadership with more loyal people.

October 6–19, 2003 November 3–16, 2003