Measures of the new Romanian Government

The new government in Bucharest is to present its objectives in Parliament.

Corina Cristea, 10.03.2014, 13:39

The platform of the new Romanian government, which Prime Minister Victor Ponta will present in Parliament this week, focuses on simplifying taxation and increasing the fiscal competitiveness of the business environment. To this end, the government intends to slash the VAT from 24% to 19%, a measure to be introduced if the fiscal and budgetary framework allows it. According to the Prime Minister, the government also considers reducing the VAT to 9% for several basic foodstuffs. The measure would be a boost for domestic producers and would reduce tax evasion for foodstuffs, the Prime Minister added.

The new Cabinet also eyes several taxation-related changes. For the time being, the 16% threshold will be maintained, and during this government’s mandate the differentiated taxation on incomes of 8%, 12% and 16% will be introduced. The new government program also includes harmonization with the European average value of royalties cashed in by the state following the concession of state assets or the tax exemption on profit reinvested in equipment and technology.

The government also envisages a 5% cut of the health insurance contribution for employers, within the margins of the budget. Also the legislative and taxation frameworks will be simplified, which would mean the reduction of expenses entailed by red tape and taxation, the elimination of certain fees, approvals and authorizations. A new provision of the government program refers to the introduction of the partial unemployment procedure, which will sanction, for a limited period of time, the accumulation of incomes from part-time activities with part of the unemployment benefit.

Another provision in the program is the introduction of the ‘pillar 4 occupational pensions’ optional system based on the contributions of the employee and of the employer. As regards ethnic minorities, the new government program provides for radio and TV broadcasts for all national minorities, mainly for the Hungarian one, whose representatives were co-opted in the governing coalition. Consequently the missions of the public radio and TV stations, funded from the state budget, will be extended so as to allow broadcasts in the Hungarian language during the whole day.