Romania govt takes responsibility for fiscal reform

Romania govt takes responsibility for fiscal reform

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

The Social Democratic Party and the National Liberal Party of Romania assumed responsibility in Parliament on Tuesday for an extensive fiscal and budgetary reform aimed at reducing budget waste and ensuring the sustainability of the country's finances in the long term by abolishing tax reliefs, taxing luxury and reducing tax evasion.

The Social Democrats 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. Ciolacu said ordinary people will not pay extra taxes, but that luxury, excessive profits and vice will see additional taxes. To fight tax evasion, Mr. MacDonald said fines would increase significantly and the goods resulting from illegal activities would beseized and the sums that cannot be justified will be subject to a 70% tax. The move also provides for a minimum tax on turnover, reducing the number of management positions in the public sector and limitations on certain bonuses.

The opposition, who is disappointed with the government's plans to introduce new measures, has three days since the presentation of the bill in Parliament to file a no-confidence motion. There is little chance of this happening, however, 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, a group of supporters, says the government's proposals are harmful to the economy but does not believe they are unconstitutional.

If the Constitutional Court rejects the challenges, the bill will be 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.