The Liberal Democratic Party of Moldova (LDPM) said it has taken note of the new tax policy concept presented by Prime Minister Vasile Tofan, but argues that behind the government’s technical language and optimistic statements lies an attempt to cover the budget deficit through further increases in the tax burden.

According to LDPM, the Government plans to raise an additional 5 billion lei for the state budget by increasing taxation on capital, expanding the list of excise goods, changing the VAT regime, and introducing new taxes on consumption and trade.

The party argues that Moldova’s main problem is not an insufficient level of taxation, but rather weak economic activity. LDPM claims that the economy produces too little, attracts an insufficient volume of investments, creates too few well-paid jobs, and continues to lose human and financial capital. In such conditions, the party says, tax increases cannot be considered a strategy for economic development.

LDPM also stated that the increase of the tax-free minimum, presented by the Government as a measure to reduce the tax burden on labor, risks being offset by higher VAT, excise duties, service costs, increased capital taxation, and more expensive loans.

The party expressed particular concern over the proposed changes affecting investments. According to LDPM, the Government’s intention to stimulate investment and profit reinvestment while simultaneously increasing dividend taxation and doubling the capital gains tax sends contradictory signals to investors. The party argues that such measures could undermine confidence among the investment community.

LDPM also criticized the planned increase in the tax burden on the banking sector, noting that it comes at a time when the National Bank of Moldova has already raised the base interest rate to 7.5%, tightening monetary policy.

The party warned that higher taxes and more expensive financial resources will inevitably lead to increased interest rates, stricter lending conditions, and reduced private investment. According to LDPM, there is insufficient coordination between fiscal and monetary policies.

The Liberal Democrats also warned that higher VAT and excise duties will inevitably be reflected in consumer prices. For small and medium-sized businesses, especially in the HoReCa, tourism, agriculture, and retail sectors, this could result in business closures, job losses, and further expansion of the shadow economy, the party said.

LDPM argues that the Government cannot simultaneously claim to support small businesses while increasing their tax costs.

The party further accused the Government of attempting to address problems caused by a lack of economic development and inefficient state management through additional taxes. According to LDPM, authorities have not explained how they intend to reduce unproductive public spending, cut bureaucracy, eliminate what the party describes as excessive salaries for political appointees, or improve the use of public funds.

LDPM acknowledged that tax increases can generate additional budget revenues in the short term, but warned that reduced investment, consumption, and business activity could lead to the opposite effect.

The party concluded that the Government’s new tax policy is internally inconsistent and focuses on addressing the consequences rather than the causes of Moldova’s economic challenges.

“Moldova does not need higher taxes.
Moldova needs a stronger economy.”