Tax cuts in 2018 will lead to fall in budget revenues by RON 23bn, IMF says

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In the latest letter sent to the Board in Washington by the International Monetary Fund (IMF) officials, after the meeting of the IMF delegation with the Romanian government, it is estimated that by cutting the profit tax to 10% and by deciding to tax exempt incomes up to RON 2,000 the impact on the state budget will reach RON 12.2 billion, i.e. 1.4% of the GDP in 2018.

The document was posted on the IMF website, reports.

The decrease in social security contributions to 35% means, according to the IMF, a budgetary impact of RON 8 billion.

On the other hand, the VAT cut from 19% to 18% will lead to lower revenues by about RON 3.48 billion.

Overall, according to the IMF officials, the revenues would fall by RON 23.68 billion – the level of pensions and social assistance payments for three months.

According to Finance Ministry data, during the first three months of this year, the expenditures for social assistance amounted to RON 21.78 billion.

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