The Excise Duty on Fuel – A Political Dispute

The Romanian Government has made a step back in the dispute with the President and transporters with respect to the controversial excise duty on fuel.

Ştefan Stoica, 10.12.2013, 13:36

The estimated 7 eurocents excise duty to be levied on fuel, which the Government in Bucharest plans on introducing as of next year, has angered Romanian freight transporters and prompted President Traian Basescu to launch a new attack on the Government. In protest, transporters on Monday went on strike indefinitely. They claim the new tax would make them less competitive in relation to other Europeans. In turn, president Basescu sees the excise duty as a setback to economic growth, which is reason enough to take any constitutional action within his means to oppose the 2014 budget recently passed by Parliament. Constrained by the protest and the undesired prospect that the budget should not be ratified, the center-left Government led by Victor Ponta is considering a three-months’ postponement of the excise, although only in case of diesel fuel.

“In terms of prices, petrol is cheapest in Romania as compared to the entire EU. A 7 eurocents increase would not affect the economy as a whole; in the case of diesel fuel, we’ve decided to postpone the introduction of the excise by three months, so that the impact on consumer goods should not be immediate. No one transports goods with petrol-fuel vehicles”.

The Prime Minister said that the decision would not be taken without the consent of Romania’s international lenders. In turn president Basescu regards Ponta’s announcement as a premise for continuing dialogue. The president continues to hope, nevertheless, that the Government will find alternative resources to allow for a budget within the limits imposed by the IMF, which translates as a 2.2% budget deficit.

“Of course, this doesn’t exactly please me, but I am willing to show the Government they have solutions to build their budget without this excise and not for the following three months, but for the entire year”.

The solution, according to the president, would be to cut back on redundant public spending. Although the president spoke on a reconciling note, he did not refrain from criticizing what he believes is the true cause of the introduction of the excise on fuel, namely Ponta’s attempt to gather resources in the run up to the presidential election.