Tax cuts proposed by the new draft Fiscal Code must be examined carefully, IMF says

The fiscal relaxation measures included in the new draft Fiscal Code should be examined carefully for better understanding of how fiscal deficit targets can be achieved, the International Monetary Fund (IMF) says upon the request of Mediafax.
“The proposed tax cuts will be carefully analyzed for a better understanding on how the goals of fiscal deficit can be achieved. The IMF is ready to discuss the proposals with the government,” a spokesman for the IMF said, answering a question on the measures included in the draft Tax Code and whether they could jeopardize the loan agreement between Romania and the IMF.
The new draft Fiscal Code, presented by the Government last Wednesday, include, among others, the cut, starting next year, by 4 percent of the VAT from 24% to 20%, while for meat, fish, vegetables and fruit food and other basic food stuff the VAT will drop down to 9%. It also provides cuts by next year in excise duty on petrol and alcohol, eliminating tax on special constructions and of the 16% tax on dividends income and the reducing the flat tax from 16% to 14% in January 2019.
The IMF review mission, that visited Bucharest January 27 to February 9 for consultations and for the third review of the stand-by arrangement with Romania, “has been informed of the authorities’ intention to cut the future VAT level and the excise duties,” said the IMF spokesman.
According to the Fund, the Romanian government reiterated its support for the program agreed with the IMF and EU.
Fiscal relaxation measures proposed by the new Fiscal Code will result in non-collecting of budget revenues exceeding RON 37 billion during four years, but half of the amount will be recovered based on the positive effect that will be recorded in the economy, according to government estimates.