Activity of the Parliament on July 4–29, 2005

July 11–15, 2005

One plenary sitting of the Parliament took place in the period concerned but it had a record duration — more than five hours. The sitting heard a report of the Finance Ministry regarding the execution of the state budget for 2004, with lawmakers raising questions and objections regarding execution of the budget. Also, the same sitting adopted in the first lecture a draft law on bases of the budgetary-fiscal policy for next year. Taking into account the importance of this document, as well as the fact that it will serve as ground for state budget incomes in 2006, both the opposition, and the parliamentary majority demonstrated a great interest for this draft through criticism and proposals, which will be taken into consideration when the draft will be adopted in the final lecture.

Draft law on modification and completion of legislative documents on budgetary-fiscal policy and fiscal management for 2006

The draft law adopted in the first lecture will establish general principles and norms for implementation of some provisions of the fiscal legislation next year and will create the base of state budget incomes for 2006.

Most and basic amendments envisage the Fiscal Code and namely several key chapters:

Income tax

The amendments call for:

reduction of income tax for businesses from 18 percent down to 15 percent;
reduction of income tax for individuals (up to 20,000 lei a year) from 14 percent down to 13 percent and, respectively, from 9 percent down to 8 percent;
rise of annual personal exemptions from income tax from 3,960 lei up to 4,500 lei and of exemptions for kept people from 600 lei up to 840 lei;
introduction of a new taxation mechanism for tax payers who raise incomes from advertising and rent of personal and real estate goods, in the size of 10 percent of the payment source;
regulation of distinct taxation of revenues raised by non-residents in Moldova.

Estimates of the Finance Ministry show that collections from income taxes will increase by about 200 million lei (by 100 million lei from individuals and businesses) after reduction of the fiscal burden.

Value-added tax

The amendments call for annulment of fiscal facilities for importation and supply of drugs, pesticides and mineral fertilizers, equipment, hardware and complementary aggregates. The amendments aim to ensure respect for fiscal equity principle for all businesses, as well as reduction of fiscal evasion.

According to estimates, these amendments will increase the budget revenues on account of VAT by over 150 million lei. On the other hand, annulment of facilities could provoke higher prices for these goods, and therefore many lawmakers expressed dissatisfaction and criticized these amendments, fearing that they will hit the socially vulnerable categories and agricultural producers.

Modification of excise apply principles

A series of modifications in the list of goods for excises, as well as of excises for certain goods are proposed, shortening at the same time the procedure for their fiscal management. About 140 million lei is expected to be additionally collected after introduction of these modifications.

Increase of taxes for licences

The amendments propose the increase of taxes for licences by 11 percent and, respectively, by 39 percent in 2006, in dependence of the medium inflation rate for the past two (respectively five) years, for a series of activities, including: importation, making and sale of ethyl alcohol and alcohol production and beer; importation of tobacco items; importation and sale of oil products. About four million lei is expected to be raised in additional incomes in 2006.

A separate amendment calls for exemption from state tax of public authorities financed from state budget and local public administration authorities, for actions and contesting of court rulings, if these authorities are defendants.

This amendment had earlier provoked a series of objections, including from private sector representatives, who feared that they face an unfair treatment and the state avoids through this mechanism to apply punishment, including financial responsibility, on public functionaries who are to blame for misuse of authority in relations with nongovernmental sector.

Draft law on modification and completion of legislative documents on importation of transports

The draft law adopted in the first lecture introduces new norms in the Customs Code that prohibit the introduction and placement of motor transports, engines and car bodies older than 10 years under importation customs regimes, customs storehouse, under free zone customs destination.

Also, the draft says that motor transports which cannot be placed under any customs regime or customs destination, as well as those prohibited for introduction in country cannot be registered. The state registration will be based on customs documents which confirm the placement of transport under free circuit in Moldova’s territory.

This norm is a response to lots of doubtful cases of registration of transports with violation of customs legislation, as well as of transports prohibited for introduction in Moldova. Several penal cases have been filed in this regard, including against judges who issued decisions on mandatory registration of motor transports by the Information Technologies Department, in spite of absence of necessary customs documents.

Decision on execution of the state budget for 2004

The Parliament passed a decision and approved the execution of the 2004 state budget with incomes in the amount of 5,533,900,000 lei and spending in the amount of 5,411,900,000 lei, with a surplus of 122 million lei. The executive has already directed this surplus of budgetary sources to foreign debts.

According to a report unveiled by the Finance Ministry, many data on execution chapters were indicated.

Evolutions in macroeconomic sectors

The Gross Domestic Product rose by 7.3 percent in 2004 compared with 2003, up to about 32 billion lei.

The consumer price index grew by 12 percent in the same period, while the monthly inflation was one percent (compared with 1.2 percent in 2003).

The average monthly salary on national economy accounted for 1,104 lei, and rose by about 10 percent.

Exports increased by about 25 percent (by some 196 million dollars) compared with 2003.

Imports rose by 26.5 percent (about 371 million dollars).

The trade balance in 2004 registered a deficit of almost 780 million dollars, by over 175 million dollars more than in 2003.

Budgetary revenues

Compared with 2003, by over 900 million lei more was raised to the budget, by over 200

million lei more than planned. Also, the budgetary incomes in GDP were on the decline.

More than 91 percent of taxes were collected, by about six percentage points more than in 2003. Collections of revenues from all types of taxes were on the rise: income tax, land tax, real estate tax, indirect taxes, excises, VAT, etc.

Over 643 million lei was transferred from the state budget to the fund for assistance of territories in 2004, and about 220 million lei was transferred from budget for special destination (capital investments, state programmes, etc.).

Examining these results, opposition lawmakers highlighted the lack of a well-considered policy on investment of public money in long-term development projects. The budget was appreciated as of consumption, not of perspective, with clear priorities on investment sector and economy development.

Also, lawmakers indicated the need to attract inflows of foreign capital, including of remittances from abroad, in investment sector. They outlined the need to stir up the collection of taxes, to enhance the responsibility of public authorities for allocation and efficient management of public resources, general improvement of business climate.

The executive will fulfil these tasks for execution of the 2005 state budget and for a continued improvement of legislation on this sector.

July 18–22, 2005

As usually, the Parliament examined several important draft legislative documents by the end of the summer session, with activity of lawmakers being marked by an increased efficiency. Also, the rise of the number of examined drafts leads to their superficial consideration, appearance of immediate contradictions or of perspective between norms of these laws adopted in a hurry and the legislative framework in effect.

Nor the 2005 summer session was an exception, since last sitting had a record duration of 4–5 hours. To mention that the Parliament adopted some very important drafts in the period concerned, both from point of view of their norms, and of major political and social impact. Firstly, we envisage the law on basic provisions of the special juridical statute of settlements on the left bank of the Dniester river (Transnistria), a draft proposed by the chief of state after consultations of principles with all parliamentary factions. Representatives of civil society, public associations in Moldova, including ADEPT, had a limited possibility to comment on this draft.

The importance of this document requires a distinct study on its text, and we will unveil this study after enactment of the law.

Parliamentarians also debated on several drafts on rectification of the state budget and state social insurance budget for 2005, with certain representatives of the parliamentary opposition raising objections and criticizing the executive and governing in general.

Decision on approval of strategic directions of science and innovation for 2006–2010

This decision indicates the following strategic directions of scientific activity:

Building of the state based on the rule of law and use of Moldova’s cultural heritage in the context of European integration.
Use of human, natural and information resources for a sustained development.
Biomedicine, pharmaceutics, health strengthening.
Biotechnologies, fertility and food security.
Nano-technologies, industrial engineering, new products and materials.
Efficiency and security of energy complex.

This decision would not present a major interest, if it did not abrogate another two decisions of the legislature on this issue:

The October 24, 2002 decision # 1401-XV on approval of the list of key research-development directions for 2003–2010, financed from the state budget, and the December 25, 2003 decision #566-XV on approval of strategic research-development priorities for 2004–2010.

The list approved through these decisions comprised the following priorities:

Fundamental researches in mathematics, exact, technical, economic, social, and humanistic sciences.
Sciences of life and human health.
Agricultural sciences and food security.
Relaunching and social-economic development through innovation and technological transfer.
New materials and modern technologies.
Energy systems, alternative energy sources, efficient processing and use of energy.
Information technologies, electronics and communications.
Functioning of ecosystems, biodiversity, and reasonable use of natural resources.
Use of historic and cultural heritage of Moldova.

Thus, we can say that the Government changes its priorities of scientific activity and development with less than two years after approval, excluding or cardinally suppressing fields such as:

Fundamental researches in mathematics, exact, technical, economic, social, and humanistic sciences;
Information technologies, electronics and communications.
Functioning of ecosystems, biodiversity, and reasonable use of natural resources, etc.

The decision adopted at the initiative of the Academy of Sciences does not say what will happen with the ongoing programmes and projects implemented under auspices of abrogated decisions, nor it motivates the need to modify these directions, which had earlier been described as strategic and basic.

It is hard to appreciate the new priorities of this sector, as well as the term when the scientific community will be convinced why these are the key directions, since the previous ones are modified in less than two years after adoption.

Draft law on enterprise Orasul Vinului

The draft adopted in the first lecture proposes the redistribution of state-administrated land fields and granting of about 15 hectares of land to the state-owned enterprise Orasul Vinului, created to implement a commercial investment project, aimed to promote the domestic vine growing and wine making sector.

Thus, these fields will be excluded from public sector and included in private sector of the state, in order to get the possibility to sell them, while the enterprise will be able to use the raised resources for investment purposes. This initiative provoked objections from many lawmakers, who described the creation of this commercial complex as inopportune, saying that there are lots of investment possibilities in the Chisinau municipality and other available territories in Moldova.

Also, they feared that these fields could be abusively used, so that the state be harmed in a double measure:

through exclusion of fields from circuit that can be used lately;
through failure to raise some amounts in the budget resulted from change of destination of these agricultural fields. To note in the context that the current price to compensate the change of destination of a hectare of agricultural land is more than 600,000 lei.

Draft law on awarding of status of national cultural heritage to goods of the wine plant Milestii Mici

The draft adopted in the first lecture proposes that the patrimony of the wine plant Milestii Mici be declared as object of the national cultural heritage of Moldova, in a move to ensure the maintenance of this business as an exclusive state-owned estate and to ban the privatisation or sale of the complex to its components.

The draft proposes to award this status to:

stone galleries used for production and tourism purposes;
ground constructions with adjacent plots and vine growing and wine making geographical landscape near the village of Milestii Mici;
historical-cultural collection of wines.

Protection of this patrimony will be based on a special activity regime, including a series of principles in this area: priority of activities which exclude deteriorations and destructions; limitation of impact of anthropogenic activity; prevention of influence of harmful factors, etc.

The draft also proposes that the winery Milestii Mici hold the preferential right to use the geographic indication “Milestii Mici” in name of company, trademarks, and other industrial property objects. Thus, the draft prohibits the use of identical and similar names which contain this geographic indication for commercial purposes, if this use would produce confusions or indicate a connection with the winery Milestii Mici. The same norms obliges the holders of trademarks or names of firm containing the geographic indication “Milestii Mici” to exclude it within five years after enactment of this law.

This winery was created in 1969, being specialised in production, storage and sale of wines. It covers about 50 kilometers of galleries, located at depths of 30–80 metres, while technological tanks have a capacity of 60 million liters of wine. Also, it owns a collection of 1.5 million bottles of wine, made from 1973 to 2004.

It exports more than 90 percent of its production.

To mention that the Parliament had earlier awarded a similar status of national cultural heritage to the wine enterprise Cricova (see the July 18, 2003 law # 322-XV).

Draft law on amending the 2005 state budget

This draft proposes the distribution of more than 600 million lei which was additionally raised to the budget in the first half of this year. This amount will be mainly used for the following purposes:

To increase salaries in budgetary system. About 100 million lei will be spent for this purpose. To note that the executive had already established these rises, while the Parliament will have to approve the reallocations unless it will worsen the condition of some workers.
To increase the spending for investments and capital repairs by over 350 million lei. At least 30 percent of this amount will go to gasification; about 17 percent will be used for construction of embassies, and by 14 percent for construction of social-cultural objects, transport, road management.
To increase the spending for agriculture and forestry. More than 150 million lei will be allocated for this purpose, at least 120 million lei will be used to cover a part of expenses of agricultural producers.
To increase the spending for education. More than 30 million lei will be allocated for this purpose (mainly to increase the number of state-financed scholarships, indemnities for young teachers, and to increase by one Leu the allocations for nutrition of children from boarding schools.
To increase spending for activity of diplomatic missions to other countries. At least 26 million lei will be allocated for this purpose, mainly for insurance of functioning of Moldova’s representations to the European Union and United Kingdom.
To increase allocations for maintenance of law enforcement and security bodies. About 30 million lei will be used for this purpose, and more than half of these allocations will go to creation of a communication system of public authorities and maintenance of the Governmental Intranet system.
More than 11 million lei is allocated to continue the reconstruction of the monastic complex Capriana.

To mention that many opposition lawmakers bitterly criticized the activity and actions of the Government in this sector, with most of them describing previous decisions of the executive, which have no legal financial coverage and without approval of the Parliament, as illegal. They indicated in this regard the decisions on salary rise, use of means from the social fund to pay indemnities for veterans, and others.

Draft law on amending 2005 state social insurance budget

This draft calls for rise of spending from the state social insurance budget by over 24 million lei, of which over 23 million lei will go to cover rises and indexation of pensions. About 300,000 lei will be used for distribution and bank service of these amounts, while more than 650,000 lei will be allocated to cover the spending for fiscal tax collectors.

A large amount will be used for recalculation of pensions of executive members, which will account for about 1,700 lei on average, and this is a two-fold rise compared with the precedent period. Also, the medium pension for public functionaries rose by about 100 lei, up to almost 400 lei. The draft says nothing about why the spending for fiscal tax collectors rose since their salaries were not increased, nor the need to use large sources for services of commercial banks which distribute money for social insurance is argued.

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