The first budget adjustment in 2013
Romanian government approves the first budget adjustment for 2013.
Mihai Pelin, 31.07.2013, 15:03
After getting the approval of its international lenders, the Romanian government headed by Social Democrat Prime Minister Victor Ponta has operated the first budget adjustment for 2013 against the revision of the economic growth rate up to reach 2%.
Therefore, the ministries of healthcare, regional development and justice and the National Anticorruption Directorate will receive supplementary funds while the budgets of the labour and transports ministries and of the Government’s general secretariat will be severely cut. While this measure is not at all surprising according to analysts, it raises questions marks as to the country’s economic performance of late, given that the government has said nothing about increased revenues to the state budget. Analysts draw attention to the fact that the budget deficit will grow and that public expenses need to increase in order to reinvigorate the whole economy.
To make better use of public money, the government has passed an ordinance under which the VAT for bread is reduced from 24% to 9% as of September 1st. The measure could also apply to other basic foodstuffs if it proves successful in the bread making industry. This could be an important step towards reducing tax evasion, says Prime Minister Victor Ponta, but producers need to cooperate in this respect. Fiscal pressure on the latter will drop and the government hopes that lower taxes will encourage producers be pay their taxes to the state, which would increase the budget revenue collection rate as a result.
Moreover, the Prime Minister calls on the population to ask for the fiscal receipt when buying bread. In order to compensate for the immediate loss to the budget, the government has allotted 100 million lei, the equivalent of 22 million euros, and has approved an increase in excises for alcohol.
Excises have also been introduced for luxury goods such as cars with high power engines, yachts, objects made of gold, watches and weapons. Golden wedding rings are exempt from excises. For other types of jewellery, a 1-euro excise will be levied for one gram of gold. Buyers of natural furs and weapons will pay excises ranging from 50 to 1,500 euros, depending on the value of the objects. Drivers who buy new or second-hand cars with engines whose capacity is higher than 3,000 cubic cm will have to pay 1 euro for each cubic cm that exceeds the aforementioned ceiling. The excise for yachts starts from 4,000 euros for a ship measuring 8 m in length and grows by 500 euros for each linear meter.
A new budget adjustment has already been approved for the end of October.
