“Fit for fifty” and perhaps for more…? tax regime for petroluem activities

Nowadays, the politicians and the mass media are passionately devouring, probably absent a strategic purpose, the amendments to the Fiscal Code. One can see yet again that 25 years later the government still sees and approaches taxation and tax policies not as economic tools but rather for fund raising, as social politics instrument. However, what’s kept aside from the frantically debating, are the envisaged fiscal amendments aimed at the mining and petroleum sector by changes brought to the Petroleum and to the Mining Law. One of the potential reasons would be that this topic lacks crucial significance for the future of Romania in the eyes of the political decisions makers.

Judging by a good deal of the population, for as long as the state collects money from what the collective mindset perceives as voracious companies plundering the country’s resources (“the property of the people”), there are no grounds for public debate. Also, it wouldn’t be a topic worthy of attention and, eventually, propaganda for the mass media unless petroleum companies would again report remarkable financial revenues or would embark on new ventures – the prospection or production of new deposits (that the propaganda would include in the potential shale gas category, thus inciting local communities).

Nobody can deny the sovereign right of states to charge taxes on any activity including petroleum activities. It is of utmost importance when, why and namely how such fiscal measures are established.

When a tax burden increase in the petroleum sector is sought

There couldn’t have been a more inappropriate timing.

The worldwide petroleum sector is confronted with the fiercest crisis of the past fifty years. These days, the oil barrel price reached historical low levels. Oil companies are reconsidering their investment strategy and business plans following the catastrophic financial revenues recorded lately. The drop in investment triggers a step back in the development of new technologies, portfolio strategies are going back to drawing board, along with mass layoffs and cascade effects at subcontractor and tax revenue level. Petroleum exporting countries are faced with the same dramatic effects, which might have an impact on global security. The shrinkage of large hydrocarbon consuming markets (China) and the outlook of a massive flooding of the market with abundant additional resources (Iran) can only aggravate the intricate state of affairs.

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