EC asked for the VAT increase to 21% in Romania, sources

Government sources told Digi24.ro that in the discussions in Brussels between Finance Minister Marcel Boloș and European Commission officials, the latter suggested that Romania increase the VAT to 21% to cover the budget gap. Another option suggested by the Commission was to increase the VAT for foodstuff. According to the cited sources, the Government rejects these options.

Prime Minister Marcel Ciolacu is leaving for Brussels on Thursday to talk with representatives of the European Commission, after sending his ministers for technical discussions the other day. On the side of fiscal measures, Finance Minister Marcel Boloș presented the government’s plan to bring more money to the budget and the reasons why our country will not fall within the 4.4% deficit assumed at the beginning of the year.

The European Commission was not convinced by the proposed measures and requested additional measures. “I am sure that we will find, together with the European partners, the just solution, so that the fiscal budget framework established for 2023, 2024 and 2025 will be updated, taking into account these realities”, said Marcel Ciolacu at the opening of the Government meeting on Thursday, referring to the arguments with which he tries to convince the European Commission that Romania will overcome the assumed deficit.

“In the spirit of European solidarity, I am absolutely convinced and there are already signals in this sense that the Commission will also recognize the special financial efforts made by us this year to support Ukraine and the Republic of Moldova,” said the prime minister.

Ciolacu wants to obtain from the European Commission the acceptance that Romania can overcome the assumed budget deficit of 4.4% of GDP to the level of 5.5% of GDP.

Political sources claim that the prime minister will present the same arguments already presented by the Minister of Finance, namely Romania’s aid to Ukraine, energy aid to Moldova, as well as increasing the percentage for Defense to 2.5% of GDP.

The government does not take into account the options proposed by the Commission regarding the VAT increase. “There was no discussion of growth, the first time we collected better,” say political sources.

If the European Commission and the Government do not reach a compromise, the Commission has the tools to propose stopping some European funds destined for Romania until the country re-enters the assumed deficit reduction trajectory.

In Brussels, Prime Minister Marcel Ciolacu will meet with the President of the European Commission, Ursula von der Lyen.