Fuel price rises, under discussion in Romania

The Government's intention to raise fuel prices was met with a wave of criticism from the Opposition, the National Bank governor and road carriers

Leyla Cheamil, 09.08.2017, 13:19

Although they
were called in for a special session, the Romanian Deputies and Senators were
in no rush to attend the meeting in which they should have discussed the
emergency ordinances passed last week by the Government headed by the Social
Democrat Mihai Tudose. The bills for which the special session was originally
convened concern, among other things, the adjustment of pension benefits to the
inflation rate, a cap of nearly 1,900 euros per month on child rearing
indemnity, a 10% increase in police worker salaries and a 15% rise in the
salaries of civilian personnel in the Defence Ministry.

On the other
hand, the Government is considering changes in the Fiscal Code. One such
planned change is an increase in fuel excises, which would push prices up to
the level reported in late 2016. Under a draft ordinance, excise duties on
diesel fuels will be raised by 24.9%, and excises on lead-free petrol by 22.8%,
as of September 1st. Authorities say that budget revenues in this
category have dropped, and fuel prices in Romania are among the lowest in the
European Union. The Senate Speaker Calin Popescu Tariceanu, whose party, the
Alliance of Liberals and Democrats in Romania, is a member of the ruling
coalition, says the excise increase would influence end-prices to a very small
extent.

Calin Popescu Tariceanu: At present, fuel charges are not actually paid by companies. Companies only
bill the amounts further to end-users and transfer the respective money into
the state budget. This is how things work everywhere, in Romania as well as abroad.
So this increase in fuel excises will only have a slight, virtually
insignificant impact on the end-price of fuels.

However, the
Opposition does not see the move with friendly eyes. The Liberals warn that
prices and tariffs for all goods and services are bound to go up. The president
of the Liberal Party, Ludovic Orban:

In order to be able to cover the salary and pension increases which are not
based on actual economic growth, the Tudose Cabinet only takes measures that
will lead to the collapse of the Romanian economy. The Government’s plan to
raise fuel excises will lead to increases in the prices of all goods and
services, as a result of fuel price rises.

In turn, the
governor of the National Bank, Mugur Isarescu, warns that an increase in excise
duties will push the inflation rate up. The National Union of Road Carriers has
also criticised the Government’s intention. The organisation warns that around
70% of the current fuel purchases by international carriers in Romania might
get shifted to other countries, which would have a disastrous impact on the
state budget. Carriers also suggest that the state should refund the VAT in an
easy and predictable manner, to both Romanian and foreign taxpayers, so as to
attract fuel consumption and collect higher excises.