The government assumes responsibility for new fiscal measures

The Romanian government assumed responsibility in Parliament for a fiscal and budgetary reform.

Roxana Vasile, 27.09.2023, 14:00

Romania’s coalition government made up of the Social
Democratic Party and the National Liberal Party on Tuesday assumed
responsibility in Parliament for an extensive fiscal and budgetary reform aimed
at reducing budget waste and ensuring the sustainability of the country’s
finances in the long run by eliminating a number of tax reliefs, taxing luxury
and reducing tax evasion.

In his Parliament address, the Social Democrat prime
minister Marcel Ciolacu said the package of measures also includes keeping a
low VAT level for food, medicine and firewood and raising the minimum wage by
10%, while imposing an additional tax on the profits of banks and large
companies. Marcel Ciolacu:

An era is coming to an end today in Romania’s
history. No more trickery. Everyone will pay depending on how much they earn.
You can’t be a millionaire but pay tax like someone earning the minimum wage.
You can’t earn excessive profits but not pay anything in the country where you
earned them, and simply showing up for work doesn’t entitle you to bonuses of
tens of thousands of lei with no accomplishments to account for them.

Ciolacu gave assurances that ordinary people will not
pay extra taxes, but that luxury, excessive profits and vice will see
additional taxes. To fight tax evasion, he said fines would grow significantly
and the goods resulting from illicit activities would be confiscated and the
sums that cannot be justified will be subject to a 70% tax. The reform also
provides for a minimum tax on turnover, reducing the number of management
positions in the public sector and caps on certain bonuses.

The opposition, who is unhappy with the measures
announced by the government, has three days since the presentation of the bill
in Parliament to file a no-confidence motion. There is, however, little chance
of this happening, as they are unlikely to gather the 117 signatures needed.
The Save Romania Union and the Force of the Right, a splinter Liberal group,
said they would contest the measures in the Constitutional Court. The Alliance
for the Union of Romanians, another party in opposition, says the government’s
proposals are damaging to the economy but that it does not believe they are
unconstitutional.

If the Constitutional Court rejects the challenges,
the bill is automatically adopted, and the coalition government will go on
together. No one in Romania is under any illusions, however, that, once this
episode is over, political squabbles will stop here, given that the stakes are
enormous in the run-up to next year’s presidential, parliamentary, local and
European elections. (CM)