Moldova lost 765 million lei to the state budget by subsidizing the registration of polluting vehicles with diesel engines - the Institute of European Policies and Reforms.
Experts from the Institute of European Policies and Reforms came to this conclusion in their study. They noted that in the summer of 2023, the Parliament of Moldova passed a law that allowed owners of cars with foreign license plates to register their vehicles in the country with a significant 70 percent discount on the excise tax paid. This government policy raised a number of questions from the outset regarding fairness to other citizens who paid full excise duty when purchasing a car, and how the government's tax policy aligned with Moldova's environmental commitments and sustainable development goals. According to the Customs Service, from July 1, 2023 to January 31, 2024, in the customs regime were registered 11406 vehicles, and revenues to the budget exceeded 328 million lei. If the owners of these cars paid excise taxes in full, the state budget would receive approximately 1 billion lei. Thus, by offering this tax break, the authorities lost 765 million lei in revenue by subsidizing and allowing the registration of cars with polluting diesel engines. This is one of the main conclusions of an analytical note prepared by the Institute of European Policies and Reforms' Deputy Director Stanislav Ghilețchi, which analyzes the consequences of this government policy. According to the author, the greatest interest was caused by the impact on the environment. The analysis showed that a significant proportion of registered vehicles are of significant age, with 67% of them over 16 years old. By fuel type, 89% of registered discount vehicles use diesel fuel, while 11% use petrol. At the same time, 44% of cars had an engine capacity from 2000 to 2999 cub. cm. Thus, registered vehicles indicate a high potential for environmental pollution. “This initiative contradicted other current political documents, which, on the contrary, concentrate efforts not only on reducing pollution levels, but also on updating the car fleet in Moldova. According to the State Register of Transport, the share of vehicles over 10 years old increased from 68.5% in 2014 to 80% in 2021,” noted Stanislav Ghilețchi. He said the results highlight the need to carefully examine transportation tax policies to ensure they are consistent with other government policies. It is critical that government decisions reflect the country's strategic objectives and take into account the impact on the environment and society as a whole, without developing narrow government policies that raise questions about the efficiency of public money. Based on its analysis, the Institute of European Policies and Reforms made a number of recommendations. In particular, authorities are encouraged to more rapidly integrate environmental provisions into transport policies. The new regulation on periodic technical inspection should have been approved already in 2018. Over the past 5 years, its approval has been postponed several times. In this context, it is recommended to expedite the development, consultation and approval process. It is also recommended that public policy be adopted through a process of impact analysis and quantification of costs and benefits. Although the Methodological Guidelines for Preliminary Impact Assessment of Government Policies have been approved at the government level, the authorities do not use them when they initiate the implementation of various government policies. Government policies cannot produce results and bring about change if they are adopted without a good understanding of the financial, administrative, economic, social and environmental implications. Experts also draw attention to the need to increase consistency between planning documents and state policies developed at the level of central public administration. Sectoral policy documents must be correlated with the National Development Strategy for European Moldova until 2030 and the medium-term budget. The existence of contradictions in the implemented government policies will affect the consistency of planning and may also undermine the speed of the process of bringing into compliance with EU legislation. The Institute of European Policies and Reforms experts also noted that all policies approved by the authorities, including changes to taxes, duties and excise duties, should be quantified at the initial stage of development. Detailed analysis of revenues and expenditures is necessary to provide a sound and transparent rationale for public policy.// 21.02.2024 — InfoMarket
