The economical and fiscal Reform in the Republic of Moldova has promoted the formation of the fiscal system, in concordance with market economy. At first the accent was made on the macroeconomic accent, and then on the microeconomic one. It is necessary to mention the importance of insurance of the government’s costs and to restructure the fiscal system in an instrument of management in economical activities. Nowadays the fiscal function of taxes is more commonly encountered, limiting the function of economic branch.market economy, fiscal policy, Moldova

Galina Caraganciu

Valentina Fetiniuc

English

Research Papers in Economics

4
Revista economică
Section i. 
Politics and models of economic growth
Valentina Fetiniuc, PhD., 
Institute of Economy, Finance and Statistics
Galina caraGanciu, PhD. Stud.,
Commercial Cooperative University of Moldova
ThE IMpACT Of GOVERNMENT IMpLICATION 
IN ThE ECONOMICAL ACTIVITy IN SOME 
INDUSTRIAL ENTERpRISES IN ThE 
REpUbLIC Of MOLDOVA
The economical and fiscal Reform in the Republic of Moldova has 
promoted the formation of the fiscal system, in concordance with market 
economy. At first the accent was made on the macroeconomic accent, 
and then on the microeconomic one. It is necessary to mention the 
importance of insurance of the government’s costs and to restructure the 
fiscal system in an instrument of management in economical activities. 
Nowadays the fiscal function of taxes is more commonly encountered, 
limiting the function of economic branch.
At the microeconomic level, until now there was predominant a 
single criteria – the comparative analysis of the fiscal pressure, in the 
Republic of Moldova, as in other Eastern countries. But the economical 
and financial state of the Republic of Moldova is of no comparison 
with the reality from other Eastern countries. The enterprises are in a 
search of a place on the market. The processes of modernization and 
recycling are at an extremely low level, this fact makes it even worse for 
the existent cash fond and destructive consequences for the industrial 
economy as a whole. As a consequence of the previously enumerated 
two, the equilibrium between those two tax functions; is necessary.
Nevertheless we have to remark that the industry since 2002 has 
positive changes in what concerns investments. The sums invested in 
production and upgrade of machinery of this economical sector have 
indexed a increase and in the year 2007 the investments have reached 
a sum of 14936 leis; that is about five times the sum that was indexed 
in 2002.5
Revista economică
All these circumstances considerably multiply the pressure on NET 
benefit for those enterprises. Taking consideration of these conditions, 
the economical consequences of repartition of benefit, for current 
expenses could be less favorable.
For making entrepreneurial activity more efficient, in the past 
two year there were made some reforms in legislation that affect 
liberalization of economy in the Republic of Moldova.
One of the modifications concerns fiscal amnesty. The role of 
which is the possibility to redress the activities of some enterprises, 
which because of the debt to the budget couldn’t activate normally. The 
essence of fiscal amnesty is to cancel the fiscal debt to the government 
to the situation from 01.01.2007. As a result there was improvement 
of the financial indicators of native enterprises and supplementary 
possibilities to attract investments.
Another modification in the fiscal code offers economical agents 
the possibility to legalize their capital in a confidential manner, paying 
to the state’s budget only 5% of the difference between the declaration 
value and the value estimated before. (This legalization affects all 
forms of capital).
For the economical agents to redirect all of their income in company 
development, dating the year 2008 the tax on income for reinvestment 
will be 0%. Nevertheless if the economical agent decides to repartition 
some of the money to the personal consumes, in such case the tax will 
be applied in the percentage of 15%. 
In our opinion, the enrollment of these modifications will increase 
the level of investments in development and growth of companies; and 
will stimulate foreign investors to invest in national economy.
Next we will analyze the variants of calculations, which reflect the 
consequences of different benefit repartition practices.
The fiscal politic represents a macroeconomic instrument, best 
managed by the government. Also, the fiscal pressure influences directly 
the evolution of development factors – the economy’s mainstream. 
From this point of view will be examined the influence of taxes over 
the economical activity.
The Indirect Tax represents a predefined part, in conformity 
with which the potential profit is repartitioned between the state and 
the subject of production. It is evident that this part influences the 
reproduction processes and economical development as a whole. 
The process of indirect tax obligation has a dynamic character. The 
predominance of government’s fiscal interests disturbs the development 6
Revista economică
of production in the future and as a consequence the state’s income from 
tax obligation. Setting lose the fiscal pressure, in the present, with the 
condition of making an intense investment program, would increase 
the production volume in the future.
In conformity with real facts, there were investigated 20 enterprises 
from different spheres of Moldova’s economy and a computerized model 
was created. The analysis of the results is presented below. Next we 
form principles that present the base part of the model. In the analysis 
there were used two schemes.
The process of investment of NET benefit was modeled by four 
variants: total refuse of consume of a part of NET benefit; the investment 
of a part of the benefit, that remains after consume; total investment 
of the NET benefit. The sums that are necessary for investment in the 
capital fond were evaluated taking in account inflation; were utilized the 
productions factors of machine construction branch from the Russian 
market and the construction material’s production from the national 
market.
By this information the growth of enterprises’ potential, rhythms 
were analyzed, and the production rhythms. There were made prognoses 
about the volume of the income in the state’s budget.
We confide in the fact that the actual enterprise potential isn’t 
utilized in sufficient matter. This fact can’t serve as a concluding 
argument for stopping the process of technical renovation.
The theoretical bases of indirect fiscal obligation are very 
complicated. At first we have to find the point of equilibrium between 
the fiscal interests and the principle of social acuity.
These taxes are paid by the population including the ones that are 
less insured, who get their funds from the state’s budget. Nevertheless, 
it is necessary to mention that we don’t support the opinion concerning 
the neutrality of indirect taxes, and concerning economical activity. In 
condition of equilibrium of prices, the application of these taxes leads 
to redistribution of benefit in state’s favor. If not to mention the cases 
when, the application of indirect taxes provokes overcoming of prices 
of equilibrium; the fact that leads to excess of supply.
The mechanism which transfers financial flow in the social fund; 
and in the pension fund allows us to make a conclusion about the 
possibility to define these matters as indirect taxes. The fact that; in 
case this flow doesn’t get to the state’s budget and doesn’t provoke 7
Revista economică
essential modifications in their classification. We consider that from 
methodological point of view it is possible to sum all indirect taxes, 
including the allocations made above. The obtained sum makes the 
measure of indirect tax pressure over the customers.
The research was made over authentic data, confirmed by the 
chief-accountants of the respective enterprises and can be complete 
only taking in consideration the level of concurrence on the internal 
market.
The elaborated prognosis shows an intense correlation between 
the funds for development and the budget’s income. With the help of 
calculations, was demonstrated that the maintenance of existent practices 
of redistribution of NET benefit, will lead to a considerable decrease 
in production volume and in budget’s income. Only implementation 
of a reasonable politic to enterprises in what concerns investments, the 
growth of economical activity, the increase of population’s occupation, 
the increase in salary would provoke step by step development, with 
positive consequences over the increase of the industrial system.
We present the generalization diagrams, which include the results 
of the experiments.
Diagram 1. Income in the state’s Budget from 
construction enterprises
The conditions of function ability of an enterprise allow the 
accumulation of profit from economical activity. That is why the last 
three variants (which are based on private resources and loans) make 
a weak growth. The growth isn’t present only in the first variant the 
fact that denotes that economical potential of these enterprises can 
demonstrate a considerable growth in time.8
Revista economică
Diagram 2. Income in the state’s budget 
from enterprises that make furniture
The conditions of function ability of enterprises that make furniture 
don’t allow them to accumulate big profits from economical activity, 
because of the concurrence from import. That is why the first three 
variant, based on own resources don’t show a considerable growth. The 
growth takes place only in the 4th variant, but a more detailed analysis 
shows us that this doesn’t correspond to reality. The market doesn’t 
have interest in that kind of activity.
Diagram 3. Income in the state’s budget from “Farmaco” A.S.
The conditions of function ability of these enterprises don’t allow 
accumulation of big profit from economical activity. That is why the 
first three variants, based on own resources don’t show a sufficient 
growth. The growth takes place only in the fourth variant, the fact 
which demonstrates that these enterprises can present a considerable 
growth in the future.9
Revista economică
Diagram 4. Income in the state’s budget from 
“eFeS Vitanta moldova Brewery” A.S.
Diagram 5. Income in the state’s budget from 
agricultural activities
Diagram 6. Income in the state’s budget from 
“VISmoS” enterprise10
Revista economică
The conditions of function ability of these enterprises allow 
accumulation of profits from economical activity. That is why the last 
three variants (based on own resources and loans) make a considerable 
growth. There is no growth in the first variant however, the fact that 
denotes that the economical potential of these enterprises can score a 
considerable growth in the future.
Existent enterprises are divided in 4 distinct groups:
Moldova’s industry structure includes 20 types of activities grouped 
as follows:
the 1st Group – types of activity based on prime material and 
destined for internal market:
Food industry;   h
Production of other goods from non metallic mineral    h
materials;
Cosmetic and Perfumery industry;   h
Recycling;   h
Production of elements for construction, production of wooden    h
boxes.
the 2nd Group – types of activity, based on prime material, on 
complimentary articles for import, with a high grade of competition:
Production of textile products, clothing, leather tanning,    h
production of articles for travelling, shoe production;
Production of machinery and equipment.   h
the 3rd Group – types of activity, based on prime material, on 
complimentary articles for import, with a low grade of competition
Furniture production;   h
Chemical material or pharmaceutical production;   h
Paper production;   h
Plastic production;   h
Production of finished metal articles.   h
the 4th Group – enterprises that have scientific profile, which 
need realization of special restructuration programs, just as programs 
of investment attraction:
IT technologies;   h
Production of instruments.   h
In the structure of industrial production the biggest part is held 
by the first group, they get 50% from the total volume of industrial 
production. The percentage of facilities with high VAT and which have 
the possibility to fabric scientific products that are demanded on the 11
Revista economică
world market, the last indicator is of about 0.2% and in EU countries it 
is about 20% high. High percentage of enterprises with old machinery 
(or handmade) determines a low efficiency of production of entire 
Moldovan industry.
The growth of efficiency is also because of the state politic, which 
was forced to raise the salaries and to decrease the poverty that was in 
the country and to contribute to the raise of the income of the population. 
In consequence the level of salary increase has overcome the work 
efficiency. As follows in 2000-2005, this indicator has increased with 
only about 70%, while the salaries were raised by 2 times.
The internal consume market capacity development continues, 
mainly from the citizens that work abroad and send money. On the 
background of a decreased level of production this considerably 
increases the level of import, the fact that disturbs the marketing balance, 
which in 2005 was of about 1 milliard USD, therefore the economical 
risk of the state increases.
In our opinion, the measures proposed suffer from lack of 
determination. The problem is much more serious and is seen in the 
fact that enterprises don’t submit their production activity in settlement 
accounts. Barter relations and operations with money realization and 
operations with cash that go through settlement accounts of third party 
organizations are predominant.
Bibliography:
Legea bugetului de stat pe anul 2008 nr. 254-XVI from  1. 
23.11.2007;
Cod fiscal nr. 1163-XII from 24.04.97; 2. 
www.minfin.m 3.  d;
www.bns.m 4.  d.

Legea bugetului de stat pe anul

The im pact of government im plication in the economical activity in some industrial enterprises in the Republic of Moldova

http://economice.ulbsibiu.ro/RePEc/blg/reveco/431Fetiniuc&Caraganciu.pdf

The im pact of government im plication in the economical activity in some industrial enterprises in the Republic of Moldova

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics