Romania govt. takes on responsibility for fiscal reform

Romania govt. takes on responsibility for fiscal reform

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

The Social Democratic Party and the National Liberal Party of Romania on Tuesday appointed themselves in parliament for a substantial fiscal and budgetary reform aimed at reducing budget waste and ensuring the long-term sustainability of the country's finances by abolishing tax reliefs, taxing luxury and reducing tax evasion.

The Social Democrats' prime minister, Marcel Ciolacu, said that the package of measures 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. In a campaign to fight tax evasion, he said fines would rise significantly and the goods that result from illegal activities would be confiscated and the sums that cannot be justified will be subject to a 70% tax. The new legislation also establishes a minimum tax on turnover, decreasing the number of management positions in the public sector and limits on certain bonuses.

The opposition, which is upset about the government's proposed measures, has three days since the presentation of the bill in Parliament to file a no-confidence motion. However, there is little chance of this happening, 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. A major opposition party, the Alliance for the Union of Romanians, 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 is automatically adopted, and the coalition government will go on together. There are no illusions in Romania that 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.