Fiscal and budget changes
July 1 spells new price hikes for Romanians
Bogdan Matei, 01.07.2024, 14:00
The good news is that, for some Romanians, the second half of 2024 will apparently be easier. The bad news is that living costs are actually going up for everyone. As of July 1, a series of fiscal changes decided by the government take effect, from the increase of the national minimum wage to the increase of excise duties on fuel or the decrease of the index used to calculate bank interest rates. Overall, over 1.8 million employees benefit from the effects of the increase in the gross minimum wage starting July 1, from 3,300 to 3,700 Lei. The net increase for the 760 thousand workers earning minimum wages is 284 Lei, tantamount to some 57 EUR. To make sure no income is affected by the new salary scale, lawmakers eliminated the 4,000 lei threshold taken into account for granting meal vouchers or food allowances.
Also starting July 1, loan rates in national currency will slightly go down as a result of the decrease in the reference index for consumers, known as IRCC – from 5.9% to 5.86%. However, this decrease will not greatly impact the monthly rates of loan holders, economic pundits say. It will only be a four to five lei decrease, depending on the balance. The second semester also comes with an increase in excise duties on fuel, an annual measure stipulated in the Fiscal Code, which seeks to update fuel costs in line with the inflation rate. As a result, according to the Competition Council app, one liter of standard gasoline sold between 7.42 and 7.56 Lei in Bucharest on Monday morning, accounting for an average increase of approximately 0.40 Lei, a difference that also applies to Diesel. Some filling stations already increased fuel prices last week. The media expects filling stations will continue to increase prices, all the more so since the demand for fuel goes up during the summer season. The price for oil, experts recall, accounts for only a small share of the price of fuel. Nearly half of the price is represented by taxes and excises, and right now, the budget deficit is quite large, threatening to increase and lawmakers rely on budget revenues.
Starting July 1, natural gas bills will also go up, as the National Energy Regulatory Authority (ANRE) last week approved an average 19% increase in distribution tariffs. Economic pundits say the increase in fuel excises and gas bills will have a domino effect and will inevitably lead to higher prices across the board, from food to vacations. (VP)
