Fiscal measures at the start of 2020
The Government has adopted an emergency decree that includes several fiscal measures
Corina Cristea, 07.01.2020, 14:00
On January 1 the laws on the state budget and social security budget for 2020, originally
adopted on December 23 by the Government by taking responsibility in Parliament
and subsequently ratified by President Klaus Iohannis, were published in the
Official Gazette. The Social-Democrat speakers of the Senate and Chamber of
Deputies have challenged the Government’s choice of method when adopting the
two laws at the Constitutional Court. Magistrates are expecting the opinions
from the Government and Parliament regarding a potential legal conflict in this
matter.
Interim Social-Democrat leader Marcel Ciolacu recently said that Liberal
Prime Minister Ludovic Orban should resign if Court judges decide that the
Government generated such a conflict. In turn, Prime Minister Orban said the Constitution
has no provision preventing the Government from taking responsibility over the
budget law, whereas invoking a constitutional conflict is just a subterfuge of
the Social-Democrats. The budget was built on a 4.1% growth rate, an inflation
rate of 3.1% and on an average exchange rate of 4.75 lei for a Euro. Convened
in its first session in 2020, the Government passed an emergency decree
modifying some of the provisions of the emergency decree 114, which in 2018
introduced additional taxes for companies in the energy, telecommunications and
banking sectors.
The new decree allows for the implementation of certain
measures included in the budget law for 2020. The new measures stipulate a cap
on the allowances of high-ranking officials at the level of December, 2019, a
one-year postponement of the law on special pensions for elected officials, a 30-euro
cap for 1 point of fine for road traffic offences, and a ban on the temporary
transfer of employees from the private to the public sector. Additional
measures were adopted compelling private pension funds to supplement their
capital and increase their administration fees. The 2% tax will be slashed for
companies in the energy sector, in addition to taxes on banking assets.
Although the Government was also planning to proscribe the accumulation of state-paid
salaries and pensions, it finally decided to wait for the Constitutional Court
to express its opinion in this matter. Finally, the Government gave assurances
that the holiday vouchers for public sector employees will be distributed in
2020 as well.
(Translated by V. Palcu)
