According to a draft recently registered at the Senate for debate and adoption, two measures have been introduced that target the pension contribution (CAS) and the health contribution (CASS).
This proposal is aimed exclusively at employees and persons earning income assimilated to salaries and will apply from 1 January 2024.
The payroll taxes payable by employees are income tax (rate: 10%), CAS (rate: 25%) and CASS (rate: 10%), but these are calculated, withheld, declared and actually paid by the employer. The only payroll tax due and paid by the employer is the labour insurance contribution (rate: 2.25%).
It should also be noted that, regardless of the level of the health insurance contribution, insured persons are entitled to the same health care package.
According to the draft, the CAS rate could decrease from 25% to 20%, and the CASS rate would be capped at a maximum of 3 minimum basic salaries.
Thus, the two proposed measures would significantly reduce the tax burden on employees. The result would essentially be higher net wages (in the short term), stimulating consumption and economic growth (in the medium term) and higher payroll tax revenues (in the long term) as a result of stimulating employment.
These measures, reducing payroll taxes, will ensure a relatively constant volume of aggregate demand at national level, with a positive impact on tax revenues: VAT, excise duties, payroll taxes. There will also be, in the medium term, a positive second round budgetary impact as a result of stimulating consumption and economic growth.
Moreover, the galloping inflation in the 2022-2023 timeframe calls for fiscal measures leading to an increase in the net income of all employees, both in the public and private sectors, in order to protect the relative purchasing power of employees. It should also be made clear that, regardless of the level of social health insurance contributions, insured persons have access to the same package of health services.
We would like to point out that the decrease in state social insurance budget revenues will be compensated in the short term by transfers from the state budget, and in the medium and long term we anticipate an increase in social insurance revenues and a balancing of the state social insurance budget.