Marcel Ciolacu, the Prime Minister of Romania, argued in Monday’s government meeting that Romania can no longer afford the 75 billion lei in privileges and benefits, along with a tax evasion of 150 billion lei per year. He presented the final version of the fiscal measures bill, which will be adopted by the Government through Parliament’s assumption.
“These measures aim to stop budgetary waste, combat tax evasion, and realign the tax system on fair bases,” stated Marcel Ciolacu at the beginning of the government meeting.
Compared to the initial version which was made transparent, the government removed the provision stating that local administrations cannot spend more than 2.5% of their own revenues on concerts, festivals, and local events, according to Economedia.
The Prime Minister argued that this package is necessary because Romania has “the highest labor taxation in Europe, but one of the lowest taxes and capital taxes in Europe.”
“As Prime Minister, I am obliged to put Romania’s interest above the interests of some dissatisfied groups who make profits not in billions of euros, but only in hundreds of millions of euros. There is a vital interest not to reach the cessation of European funds and the reforms in the National Recovery and Resilience Plan,” said the Prime Minister.
The main measures in the bill:
– 1% tax for micro-enterprises with income not exceeding 60,000 euros,
– 3% tax for micro-enterprises with income over 60,000 euros,
– Tax calculated by applying a rate of 1% on turnover for banks and companies with a turnover of over 50 million euros,
– Special tax for individuals who own properties worth more than 500,000 euros and cars worth more than 75,000 euros,
– Holiday vouchers will be increased to 1,600 lei, but a 10% health insurance contribution will be paid, and they will only be granted to individuals with a net income under 8,000 lei,
– Reduction of at least 25% in public office functions,
– Elimination of vacant positions,
– Elimination of the chief office position,
– Meal allowances will only be granted to public sector employees whose salary income is less than 14,000 lei gross,
– Limitation of the hazardous or harmful conditions bonus for public sector personnel to a maximum of 1,500 lei.
This bill comes as the Government needs to cover a gap of 30 billion lei by the end of the year. The targeted deficit, set at 4.4% of GDP, can only be increased to 5% of GDP, according to the Finance Minister. Otherwise, Romania risks losing European funds.
Prime Minister Marcel Ciolacu’s government intends to adopt these measures by assuming responsibility in Parliament.
This is a procedure provided by the Romanian Constitution through which the Government seeks to adopt a bill or program through a simplified procedure compared to the usual legislative process.
However, according to the Constitution, the opposition has three days to file a motion of no confidence against the Government. If the motion is adopted by vote, the bill is rejected, and the Government is dismissed.
The final document with the fiscal-budgetary measures:
