Taxation in Moldova

Taxes form an element of the social existence. Human society is heterogeneous for natural and physiological reasons. Already in antiquity this made people unite their efforts and wealth for the purpose of responding to natural disasters and external enemies, as well as in order to build common towns, to support the people not able to work and to provide for many other social needs. Taxes constitute an integral attribute of the state.

Taxes became a necessary element of the socio-economic relations at the formation of the state. The development and transformation of the state’s organisational forms were always associated with a modification of the taxation system. In the periods of slavery, states used taxes in the form of natural charges and duties (i.e. by collecting food, harvest items, etc., of personal obligations), but with the development of commodity-monetary relations, taxes took a monetary form. Primary taxes were initially applied directly on wealth through land and individual taxes. Secondary taxes appeared later, initially in the form of internal customs charges, and with the development of commodity-monetary relations, in the form of excises, which were paid by all the free individuals.

In Ancient Rome, during peace times there were no taxes, but in times of war, citizens were subjected to taxes applied in accordance to their wealth. The tax rate (or the census) was determined once in 5 years. In the IV-III centuries B.C. the Roman state was expanding, new towns-colonies were being conquered and the taxation system was changing as well. Community (local) taxes and duties were being introduced in the colonies. Rome was becoming an empire. The main source of income for the Roman provinces was the land tax; on average its rate constituted 1/10 of the revenue from the land area. Other taxation forms were also used, for example, the tax on fruit trees or vine plants. In addition, chargeable to taxation were real estate, live assets (horned cattle and slaves), and other valuables.

In addition to direct taxes, there were indirect ones, the most important of which were:

-Transactions taxes, usually at the rate of 1%
-Special taxes on slave transactions of 4%, and
-Taxes on the release of slaves at the rate of 5% of their market price.

Already in the Roman Empire taxes played not only a fiscal role, but also had the function of stimulating economic development. At that time taxes already had a monetary form, which forced the population to generate surplus production for sale. This promoted the expansion of commodity-monetary relations, an intensification of the division of labour and of the urbanisation process.

Many economic traditions of the Ancient Rome were adopted in the Byzantine Empire. In the early Byzantine period of up to the end of the VII century, the empire had 21 types of direct taxes, including:

• Land taxes
• Individual duties
• Army maintenance taxes
• Taxes on the purchase of horses
• Recruit taxes, which released the person paying the tax from military obligations
• Charges on the sale of merchandise (usually around 10-12.5%)
• Charges for issued state documents

The Russian financial system started to develop a little later. The unification of the Ancient Russian State began only at the end of the IX century. The main sources of income in the sovereign’s treasury were the tributes. In essence these constituted initially a sporadic, but later a more systematic direct tax. Indirect taxation existed in the form of sales and court charges. Transit dues called “mit” were collected for the transfer of goods through mountain gaps, shipment dues were charged for transporting goods over rivers, “hotel” dues were charged for the right to own warehouses and the “retail” tax was required for the right to organise market events.

The taxation system changed its form and improved under the influence of class conflicts. Its regressive character, conditioned by the preponderance of indirect taxes started to change in the 20th century in direct conformity with the transition to progressive income taxation. The taxation system of the 20th century, as a result of the efforts made in the finance science and practice is distributing the taxation burden more uniformly than ever in the history of taxation.

In general, the taxation system is a complex and effective mechanism for the regulation of economic conditions; it is a flexible instrument, which influences the profitability of various ownership forms, and the effectiveness of national economies in the conditions of the current science development and of economic globalisation. However, the taxation policy of the state (which is defined as the manoeuvring of the rates and types of taxes) is subject to the lag effect, in contrast to the banking-monetary policy, which is caused by the fact that any change of the tax rate must take the form of a legal document.