Update: New governing programme (II) – Constant wage increases until 2020. Zero income tax for doctors. Pension Pillar II to be dissolved


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The new governing programme is putting an end to the idea of a global household tax, promising instead a cut from 16% to 10% of the income tax cut as of January 1, 2018, with the minimum wage rising to RON 2,000 – against RON 1,510 in the first variant in January – and reducing the number of taxes to 50, of which 10 for individuals and 40 for companies.

The minimum gross wage in Romania in the next 4 years will be RON 2,000 in 2018, RON 2,200 in 2019 and RON 2,400 in 2020. For those with higher education the minimum wage will be RON 2,300 in 2018, RON 2,640 in 2019 and RON 3,000 in 2020,” the new governing programme reads.

At the level of economic governance principles, PSD continues to focus on stimulating consumption, increasing the population revenues and the production, through tax cuts and public investments.

PSD predominantly provides for a massive increase state employees and of retirement revenues by proposing a speedy increase, with a first phase starting on July 1, 2017.

“The pension point will increase in the next 4 years as follows: on July 1, 2017 the pension point will be RON 1,000, on July 1, 2018 the pension point will be RON 1,100, on April 1, 2019 the pension point will be RON 1,265, on April 1, 2020 the retirement point will be RON 1,400 and on October 1, 2020 the pension point will be RON 1,775,” the document further reads.

The minimum pension will also increase to RON 650 as of January 1, 2018.

In addition, the PSD promises to extend the current regime in IT, zero income tax, to doctors. “Starting with 2018, we are proposing the extension of non-taxation of income for doctors,” the document shows.

Holiday vouchers, in 2018

The new programme indicates the granting of a holiday voucher to each state employee only in 2018. “All employees in the public system will benefit of a holiday voucher amounting to RON 1,450 until the end of 2018. The granting will be made either in 2017 or in 2018 according to the employees’ requests, but also by the institution’s financial capabilities in 2017,” the document reads.

New state development fund

The main measure to stimulate public investments in the initial governing programme was the setting up of a Sovereign Development and Investment Fund (FSDI), mainly made up of profitable state-owned companies worth more than EUR 10 billion in the 2020 timeframe.

The fund will use dividend income from these companies, but will also raise funds from bond issues or the sale of bad assets such as holiday homes and hotels.

The largest FSDI investments of EUR 3.5 billion, over the next four years is to be achieved in the health system, where the PSD promises to build a republican hospital and eight regional hospitals.

Another EUR 3 billion will be used to build highways and fast railways which cannot be completed or launched with European funds by 2020.

The novelty of the new governing programme is the setting up of a second fund.

“Besides FSDI, at the latest in Q1 2018, a National Development Fund (FND) will be established, which will include companies where the state holds assets and which are currently managed by AVAS, but also state-owned companies that could be included in the FSDI because of the European ban, which stipulates that in some cases, production and distribution companies cannot be administered by the same entity, thus avoiding the monopoly behaviour,” the document reads.

Thus, Transelectrica and Transgaz will be managed and held by the FND, and Hidroelectrica or Romgaz by FSDI, and AVAS will be disbanded.

Pension Pillar II, dissolved. Liviu Dragnea, unclear statement

The Pension Pillar II will be dissolved and the money will be returned to the contributors, who have the possibility to opt for the social security budget or for the third pension pillar, said on Thursday Ionuţ Mişa, after his validation as Minister of Finance by the parliamentary committee.

“The second pension pillar will be dissolved and the money will go back to the contributors, who have the option to opt for the social insurance budget or for the third pension pillar. They will opt between state and private,” Ionut Misa said.

He added that the measure would come into force by the end of the year.

PSD Deputy Lia Olguta Vasilescu said on Thursday, during the hearing for the Labour Minister, that the persons who have revenues from self-employment operations will be able to opt for the Pension Pillar I or III, stating that the state pillar will not be disbanded to help private ones.

The latest news reads that PSD leader Liviu Dragnea, asked about this decision, replied to journalists: “It’s a stupidity.”

Additional tax of at least 20% on profits from the extraction of natural and unprocessed resources

The government intends to introduce an additional tax on profits from the extraction of natural and unprocessed resources in Romania, of at least 20%, according to the new governing programme. According to the document, this taxation is a ‘restoration of equity’. The tax will be stipulated in the new law on royalties by the end of 2017.


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