Challenges of the Knowledge Society (Jun 2023)
PARAFISCAL CHARGES AND THEIR LEGAL REGIME
Abstract
There are several hundred parafiscal charges in Romania, which collectively constitute the parafiscal system. These taxes are not officially designated as such, and they exist in the gray or black areas of the country's financial economy. This form of taxation is not a part of the official tax system and lacks consistent and clear guidelines that would apply to all its components. It is essentially a hidden tax, masquerading under a new term in legal jargon, which adds to its enigmatic nature. The realm of parafiscal charges is highly unpredictable, volatile, and precarious. With their sheer number and potential hazards, it wouldn't be far-fetched to liken it to quicksand using a metaphorical lens. The parafiscal charges, despite sharing some similarities with compulsory tax levies, exhibit several differences owing to the various names they go by. Parafiscal charges are akin to taxes and other fiscal duties in that they are imposed by an authoritative body and carry legal obligations. However, they are closer in nature to taxes than they are to fiscal duties in that, often, their payment does not entail direct and immediate consideration. In conceptual terms, parafiscal charges differ from fiscal levies mainly because their objective is not primarily to generate public revenues to cover expenses made for the general welfare - this is the main purpose of taxes and fiscal duties. Rather, parafiscal charges are intended to secure financing and income for specific entities and activities, such as OSIM and the health system or various social and cultural initiatives. They also indirectly provide state aid to private entities or individuals by compelling consumers of products and/or services to make payments for this purpose directly to the beneficiaries, with such payments being concealed in the price of the product/service (e.g., cultural stamp). Parafiscal charges are also distinct from compulsory fiscal levies in that they are not subject to administration and utilization in accordance with fiscal and budgetary laws. To be more precise, parafiscal charges ought not to be managed in conformity with fiscal and budgetary regulations. If they were, they would then be considered as taxes or fiscal duties. Moreover, some of these charges are either treated as fiscal claims or are a (incoherent) combination of tax and non-tax aspects. Parafiscal charges have received severe criticism from both the business community and experts. These charges have been described as moldy, abracadabrant, taxation-outclassing, out of control, discretionary, ineffective, and aberrant, among other epithets. However, certain quasi-fiscal charges that have been subject to constitutional scrutiny, such as the clawback tax, cultural stamp, and judicial stamp duties, have been declared constitutional. However, among the numerous parafiscal charges that have not yet undergone constitutional scrutiny, some are unconstitutional or, as the case may be, unlawful (not all of them are established by law, such as the parking fee). It is not, however, possible to make a blanket statement regarding the constitutionality or unconstitutionality of parafiscal charges as a whole. The Romanian authorities have made several attempts to decrease the number of parafiscal charges, some of them successful, although in relation to less important ones that had no major impact on revenues. However, the Romanian legislator does not consider the French model of completely abolishing such charges. The desire to maintain and increase the number of parafiscal charges can be attributed to two factors: firstly, the increasing need for revenue by the government, and secondly, the apprehension of the public's response to an increase in the number and amount of taxes and fiscal duties. There are other explanations for keeping parafiscal charges alive and for instituting new such charges. As such, a number of these charges are concealed within the prices of products and/or services, either to go unnoticed or to shift dissatisfaction onto the supplier of the product or service provider, who collects the price along with the parafiscal charge. This model is similar to that of indirect taxes like VAT and excise duties. Finally, a crucial reason for the persistence of parafiscal charges is that they are not subjected to the strict fiscal and budgetary rules of administration and control. Typically, parafiscal revenues are collected and used by the beneficiaries themselves, outside of the regular budgetary system. This lack of accountability for both the collection and use of these funds absolves both the beneficiaries and the state of the need to justify their methods. As a result, it is impossible to determine the exact proportion of parafiscal revenues in the overall revenue generated by the state and local communities, as well as in the country's gross domestic product. Additionally, it is unclear how much money are spent for such charges by those who are obliged to pay them. Parafiscal charges have a wide variety, and they are identified by different names: contributions, solidarity contributions, tariffs, taxes, payments, royalties, and more. They can cover various fees, from parking fees and cultural stamps to cadastral fees, fees for services provided by public entities, fees for gambling activities, museum visiting taxes, offset, and clawback taxes. The variety and complexity of parafiscal charges, coupled with their inconsistent regulatory framework and diverse beneficiary types, make it difficult to establish a universally accepted definition of such charges. In this context, it is sufficient to state that all payment obligations that are established by an authoritative body and are not of a strictly fiscal nature fall under the category of parafiscal charges.
