The social security contributions paid by employees could be cut by up to 6% next year, Prime Minister Calin Popescu Tariceanu said yesterday.
"We decided a priority for 2008 is an up to 6% cut of the social security contribution each employee has to pay," the Prime Minister stated. He added it was best for the money to stay with "active citizens" than be collected for the public budget.
"More money at home for the active citizens means both an improvement in the standards of living and a premise for economic development on a much healthier basis than if this money stayed with the state. Because more money is available to the most important economic operator - the citizen, a significant increase in savings and investments will entail," Tariceanu stated, explaining the Government's intentions.
At present, the social security contributions (CAS), which are used to pay the pensions for the about 4.7 million retired people, account for 29% of the gross salary. Out of this 29%, the employer pays 19.5% and the employee 9.5%. The 6% cut in the contribution made by employees would see each taxpayer keep almost 12% of the net salary.
Therefore, in case of a total gross salary of 4,080 RON (1,200 euros), which translates into a net salary of 2,171 RON (639 euros), the amount that the taxpayer retains is 76 euros.
"As with any tax cut, this will come as a welcome step," comments Gabriel Biris, a tax lawyer and partner of Biris Goian law firm. He says the payment obligation of the social security contributions is the main reason why many large salaries are not officially registered and are paid in various other ways in order to avoid paying tax contributions.
Normally, social security contributions are paid for each employee that has a legal employment contract. Other than social security contributions, healthcare contributions worth 12.5%
