EC Vice President: We estimate that the VAT cut will have a substantial negative fiscal effect

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Valdis Dombrovskis, Vice-President of the European Commission, said on Wednesday in Bucharest that there are concerns in Brussels related to the Romanian Government’s plans in regard to the new Tax Code.

“We have communicated to the Prime Minister a number of concerns about the Government’s plans for the new Tax Code which will substantially reduce the VAT rates, which, according to the European Commission estimates, would have a substantial negative fiscal effect,” said EC Vice-president for European Commissioner for the Euro and Social Dialogue, Valdis Dombrovskis, during a joint press conference with Prime Minister Victor Ponta and Labour Minister Rovana Plumb, hotnews.ro informs.

In addition, this proposal is not in line with the general recommendations of the European Commission on fiscal policies which generally recommend decreasing pressure on labour taxation, in particular on the low salaries, towards the tax bases that affects less the growth, including the consumption, the EC official further said.

However, he stressed, the EC is willing to carry out detailed discussions with the Romanian government to identify compensatory measures and find the best option to ensure sustainable public finances in Romania.

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