Gov’t to adopt fiscal measures package with some amendments

​​The government adopts, in a meeting on Monday, the fiscal measures it wants to assume in the parliament. However, a meeting is scheduled at the Government, with Prime Minister Marcel Ciolacu and the Minister of Finance, to conclude the package regarding the fiscal measures and amendments might be operated after the criticisms brought to the version put in decision-making transparency.

The assumption meeting is reportedly taking place on Wednesday.

Compared to the initial version, the project underwent some changes, especially at the request of the UDMR. The government abandoned the provision that established a ceiling of 2.5% of own revenues for the organization of concerts, shows and festivals by local authorities. Excise duties and investments were also eliminated when calculating the tax of 1% of the turnover of large companies.

According to mass media sources, the draft law with fiscal measures underwent several changes, such as the removal of excise duties from the turnover calculation, VAT on concerts/shows will be 9%. Meal vouchers remain on vouchers, the cash option is removed, but next week comes an order to limit operators’ commissions, while the limitation of 2.5% of revenues is removed for the expenses of institutions and public authorities with cultural, recreational and religious events.

Marcel Ciolacu Cabinet’s plan is to quickly pass, this week, the new changes through Parliament, as PSD and PNL have a comfortable majority. According to the procedure, the draft law is sent to the Parliament, where the senators and deputies can submit amendments that may or may not be taken up by the Government. After assuming office, MPs can file a motion of no confidence. If there is no motion of censure or of it doesn’t pass, the draft law is considered approved.

Prime Minister Marcel Ciolacu announced, at the beginning of Monday’s government meeting, that the package of fiscal measures for which he will assume responsibility in Parliament has been completed. “Romania can no longer afford facilities and privileges of 75 billion lei, plus a tax evasion of 150 billion lei per year,” the prime minister argued, adding that it is not about “austerity” measures. “Austerity was when salaries and pensions were cut in 2010 and VAT was increased from 19 to 24%,” he said.

“Today, we have the final form of fiscal-budgetary measures, after consultations with all social partners – unions, employers, NGOs, but also with the local administration. A good part of their proposals can be found in this project. This is the act I decided to take responsibility for in Parliament! These are measures aimed at stopping budget waste, combating evasion and re-establishing the tax system on a fair basis“, stated Ciolacu, at the beginning of the government meeting.

The Prime Minister says that “Romania can no longer afford facilities and privileges of 75 billion lei, plus tax evasion of 150 billion lei per year. Together they mean 15% of GDP, there is no example of a modern state that can function in such conditions.”

“Romania’s budget is based on taxes paid by employees, their consumption and public investments. But we have an aberrant paradox: the highest taxation of labor in Europe, but among the lowest taxes and taxes in Europe on capital! As prime minister, I am obliged to put the interests of Romania above the interests of some groups who are not satisfied that they make profits not of billions of euros, but “only” of hundreds of millions of euros. And there is a vital interest: that of not stopping European funds and PNRR reforms. All in all, we are talking about a huge stake, over 70 billion euros, and Romania’s accession to the OECD, which would bring an influx of foreign investments to our country! I will not undertake to endanger such strategic objectives of the country!”, said Marcel Ciolacu.

He underlined that it is not about “austerity” because it does not increase VAT on all goods and services and does not cut wages and pensions. “I have seen all kinds of interpretations by some that these decisions bring austerity. The truth is that Austerity was when salaries and pensions were cut in 2010 and VAT was increased from 19 to 24%. Then the Romanians were impoverished and their purchasing power collapsed. However, this Government does not increase the general VAT. And we keep the VAT on food and medicine at 9%. Just as we keep the lowest VAT of 5% on firewood, energy, gas and books. So there is no risk of prices going up. In addition, one cannot speak of austerity when a key measure is the increase of the minimum wage by 10% from 3,000 to 3,300 lei. And in construction, by emergency ordinance, we are increasing the minimum wage by 12.5% ​​to 4,500 lei. We are thus talking about an increase in the minimum wage for 2 million people, and ordinary employees will not pay any additional tax”, says Ciolacu.

“It is true, some will no longer be heads of state. Thousands of positions of bosses will be abolished, along with the whole lot of advisers, drivers and secretaries. It is the most ambitious reform of the budgetary apparatus since the revolution, and it would have been expected that this process would be started earlier. It didn’t happen, so I’m doing it now. I’m not going to take a step back. Major reform is needed and I am ready to undertake it because it is the only chance to continue the development of Romania”, the prime minister said.