The experts of the four parties supposed to form a new ruling majority and a government in Romania by June 15 have agreed on a short list of measures aimed at securing fiscal consolidation in line with the European Commission's requirements and investors' expectations - but deferred the final decision for June 9 when all parties will have agreed over the measures.
Hiking the VAT rates is an almost certain ingredient of the consolidation mix, despite president Nicusor Dan's promise to avoid such a decision. But the direct impact on revenues is likely to secure the entire plan's credibility, which is important for the EU and rating agencies.
President Dan announced that he would have a discussion with the party presidents on the evening of June 9, when they would make a final political decision on fiscal measures, according to Digi24.
The fiscal consolidation package reportedly includes various versions of VAT rate hikes, deferring part of the planned public investments, and cutting expenditures through the merger or elimination of public institutions, as well as reducing benefits in the budgetary sector.
A "solidarity tax" on net incomes exceeding RON 10,000 (EUR 2,000) is envisaged but not unanimously agreed by the party experts, as well as healthcare insurance contributions for pensions above a certain threshold. These are part of a broader category of measures supported by only part of the experts.
The changes regarding VAT are the most complicated. Although the final decision will be a political one, the scenarios on which calculations were made are multiple. According to the draft that Digi24 has obtained, the most reduced rates (5% and 9%) would increase to the standard threshold of 19%. The increases would be felt especially in HoReCa.
Hiking the standard VAT rate from 19% to 21% is still an option.
Romania must enact the fiscal plan by the end of the month, ideally before June 20, in order to prevent disciplinary measures from the European Union under the Excessive Deficit Procedure.
iulian@romania-insider.com
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