Romania's emerging governing alliance initiates initial steps to enhance public income
Let's take a gander at the fiscal plans brewing in the Romanian political scene. It seems like a coalition working group, primarily concerned with financial matters, has been cooking up some potential solutions to combat fiscal slippage, according to Ziarul Financiar. Mind you, this is a sneak peek at the bunch of ideas tossed around recently, and it ain't final or set in stone just yet.
The discussions on the fiscal corrective plan are slated to wrap up on June 5, as President Nicusor Dan stated at a press conference on June 4. By June 9, the ruling strategy is expected to be complete. But, it's all negotiating tables and no agreements so far, as there's no unanimity among the parties on these proposed measures.
The main focus of the proposals seems to be on boosting revenues:
- A possible VAT rate hike from 19% to 21%, with the preferential 9% rate likely going up to 12%.
- HoReCa sectors, such as restaurants and hotels, may see an increase in VAT to 19%.
- Corporate tax might leap from 16% to 19%, while the dividend tax rate could soar to 16% (from the current 10%).
- A 10% health system contribution (CASS) might be imposed on pensions exceeding RON 2,500 (EUR 500).
- Taxation of transfer/transaction prices could be introduced at 2% of the value.
- A solidarity tax could be levied on incomes exceeding RON 10,000 (EUR 2,000), with 16% of the amount above the threshold paid until December 31, 2025.
- The introduction of progressive taxation from January 1, 2026, is proposed by the Social Democrats (PSD).
- Excise duties might see a 20% hike, except for gasoline and diesel.
- Gambling could be taxedmore heavily, and luxury items like jewelry and expensive cars could bear a higher tax burden.
- Tax allowances for bars and nightclubs could be abolished, moving their tax rate to a 5% profit tax.
- There are proposals to list state-owned companies, and some companies like Hidroelectrica, Salrom, Romgaz, Nuclearelectrica may be put up for privatization.
- The reformist party USR, backed by PNL, suggests introducing social security and health insurance payments for incomes derived from intellectual property.
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While specific information about the proposed tax hikes and fiscal measures by the Romanian political parties' working group is scarce, other sources highlight the need for immediate fiscal reform and budgetary consolidation to dodge a funding crisis in Romania, as stressed by academic economists[2]. The IMF recommends increasing VAT and excise duties, implementing two income tax rates (15% and 25%), among others, to boost revenue and reduce the deficit[5]. Romania's economic growth forecasts have been revised downward due to fiscal consolidation and other obstacles like surging energy costs[3][4]. For a more detailed look at the measures proposed by the working group as reported by Ziarul Financiar, it's best to consult that specific source.
The proposals by the Romanian political parties' working group target boosting revenues via potential VAT rate increases, alterations in corporate and dividend taxes, and the introduction of new taxes, such as a health system contribution, taxation of transfer prices, and a solidarity tax. Meanwhile, academic economists and the IMF echo the call for fiscal reform and budgetary consolidation, advocating for increased VAT and excise duties, and the implementation of progressively structured income taxes.
