According to a report obtained by HotNews.ro, the World Bank proposes to abolish the reduced VAT rates and seems to approve an increase from January 1 for sugary drinks to 19% and to 9% (from 5%) for Horeca.

The international institution suggests going further.

“An ideal VAT system would abolish most, if not all, reduced rates and apply a single rate of VAT on the widest possible basis,” the paper said.

However, the WB notes, such a reform would be politically difficult, at least in the short term, in light of the current rise in food and energy prices.

• Instead, in the short term, Romania should consider abolishing reduced rates such as restaurant meals, hotel stays, books, magazines, newspapers, museums, zoos, gardens and parks.

According to the cited sources, these low rates have a negative impact, distort consumption decisions, the value of income and are unlikely to be an effective means of solving social or cultural objects.

“In the long term, once the current food and energy price crisis is over, further expansion of the base should be considered, including reductions in quotas for food, pharmaceuticals, water, firewood and district heating,” the report said.

However, to ensure that poor households are not affected by such reforms, cash transfers must be implemented simultaneously to fully compensate poor households, the paper notes.

Reduced tariffs for firewood and district heating are at odds with the medium-term objectives, and their abolition would ensure better alignment with proposals to end fossil fuel subsidies and increase carbon taxation.

Photo source: Dreamstime.com

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