State budget without new taxes

The ruling coalition is to finalise the draft state budget for next year

Leyla Cheamil, 13.12.2021, 13:50

Romania’s ruling coalition, made up of the Social Democratic
Party, the National Liberal Party and the Democratic Union of Ethnic Hungarians
in Romania (UDMR), is to submit the draft budget law for 2022 to Parliament by December
20, for discussion and endorsement. The 3 parties intend to have the
fiscal-budgetary strategy passed by Christmas.

The law
must provide funding for investments, the increase of public pensions and
allowances, while at the same time keeping the budget deficit under control.

The idea of
introducing new taxes has triggered debates in the new ruling coalition. The Liberals
once again emphasised that next year’s budget will not be based on new taxes. However,
the Social Democrats and UDMR sought to levy an additional 1% of turnover tax
on companies with turnover in excess of 100 million euro. According to UDMR,
the money would cover healthcare and education investment needs, but the
business community voiced discontent with the measure.

The Liberal
president Florin Cîţu mentioned that these companies paid taxes in advance last
April, when the economy was shut down, and argued that it is not fair for the
same businesses to be penalised.

In turn, PM
Nicolae Ciucă promised there will be no such taxes. This is precisely what we
pledged in the governing platform, namely that no such tax will be levied this
year. The governing plan was endorsed by Parliament and it will be applied as
such,ˮ Nicolae Ciucă pointed out.

The finance
minister Adrian Câciu said in turn that the budget will not include new taxes,
and that any change in the tax system will be predictable and operated after talks
with private businesses. He said Romania needs solidarity now, to protect
low-income citizens from price rises, especially in the energy sector. We will
achieve this by stimulating the economy and encouraging the companies that
produce in Romania, regardless of their ownership, because all that is produced
in Romania is produced by Romanian employees. A product made in Romania means
jobs for Romanians. By supporting Romanian producers, we provide guarantees that
hundreds of thousands of people will have stable, safe jobs, the finance
minister Adrian Câciu explained.

In turn,
the Social Democratic leader Marcel Ciolacu said that should the coalition
decide to introduce a new tax, this will not take effect sooner than in 6
months’ time. On the other hand, he said the country has major problems in
terms of tax evasion and VAT collection. Romania is estimated to have tax
evasion accounting for 10% of GDP at the moment. Moreover, 34% of the VAT owed
is not collected,ˮ Marcel Ciolacu warned. (tr. A.M. Popescu)