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Impact of Moldovan Tax System on Local and Agriculture Sector Development: 25 Years of Experience and Challenges

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  • Criclivaia, Diana

Abstract

Moldova's transition from planned to market economy required a total reconstruction of the tax system structure, particularly: taxes, tax administration and legislation of tax matters. However, in practice, Moldovan tax system (MTS) was not able to solve the multitude of problems that occurred. This system is unfair as it hampers economic growth, applying half measures, and does not ensure state programs and services are efficient especially on agriculture sector. The legal economy was substituted with “shadow one” that gets alarming proportions until present. The largest share in total informal employment holds agricultural sector, and the main contribution belongs to households. Due to the specificity of this type of employment, 80% of informally employed people are working in rural areas, which is detrimental for an economy where about 55% of population lives in rural areas and almost 28% are employed in agriculture. The paper aims to reveal the weaknesses and strengths of MTS, related to evelopment on agriculture sector, considering several suggestions for most appropriate taxing culture changes (e.g. personalized VAT reform based on successful experience of Latin America).

Suggested Citation

  • Criclivaia, Diana, 2016. "Impact of Moldovan Tax System on Local and Agriculture Sector Development: 25 Years of Experience and Challenges," Rural Areas and Development, European Rural Development Network (ERDN), vol. 13, pages 1-24.
    • Handle: RePEc:ags:erdnra:276099
    DOI: 10.22004/ag.econ.276099
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    References listed on IDEAS

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    8. World Bank, 2016. "Moldova Trade Study," World Bank Publications - Reports 24005, The World Bank Group.
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