Tax on special pensions, disputed
The Constitutional Court was notified with respect to the special pension taxation law
Corina Cristea, 19.06.2020, 14:00
On Wednesday, the Chamber of Deputies passed a bill that introduced taxes on pension benefits. The bill had already been endorsed by the Senate in 2019, and it was backed by all parliamentary parties. It is meant to restore social justice, the MPs argued, given that disparities between the regular pensions and the pension benefits laid out in special laws are, in certain cases, outrageous.
Perhaps the most insistently covered case is the 15,000-euro pension—the biggest in Romania—paid to a former communist prosecutor who was the commander of a prison. At the opposite pole, the average pension in Romania is little over 250 euros.
From now on, according to an amendment introduced by the Social Democrat Party and Save Romania Union in opposition and by the Liberals in power, “pension benefits of up to roughly 410 euros are tax-free, those of up to 1,450 euros are subject to a 10% tax, while for pensions of over 1,450 euros, there will be an 85% tax charged for the amounts that exceed this threshold.
Beneficiaries of these so-called special pensions in Romania include, among other categories, judges and prosecutors, MPs and mayors. Military pensions also have a special status.
The bill passed on Wednesday did not include Senators and Deputies however, because this required a change in the statutes of MPs. And on Thursday, Parliament reviewed a bill modifying the Fiscal Code and approved the progressive taxation of MP pensions.
Opposing the parliamentary majority, the Save Romania floor group tried in vain to introduce a bill discarding special pensions for MPs, and explained that progressive taxation of these pensions does not need to be voted by the joint chambers of Parliament. This will lead to the Constitutional Court dismissing the law, on grounds that the same bill was actually voted on twice—once by the Chamber of Deputies as a decision-making body, and once again by the joint Chambers as a Fiscal Code amendment, Save Romania Union president Dan Barna argued.
He explained that “this is just like a movie where you shove a pack of dynamite at the constitutional foundation of this law, making sure that the Constitutional Court will reject it.
Conversely, the Social Democrats and the Liberals argued that there are Constitutional Court rulings that require joint Chambers votes on amendments to the statutes of MPs. Both parties emphasised that the law ensures social justice, and voiced surprise at the opposition of Save Romania Union.
Quite predictably, the Constitutional Court has been notified, by the High Court of Cassation and Justice and the Ombudsman. The supreme court says the bill overlooks successive relevant Court rulings, that the Higher Council of Magistrates has not been consulted and that a number of principles are breached, including the fair taxation principle and the independence of judges.
Last month, the Constitutional Court dismissed another bill abrogating special pensions, following notifications filed by the supreme court and the Ombudsman.
(translated by: Ana-Maria Popescu)
