PSD and PNL leaders are meeting today to discuss fiscal measures to bring more money into the budget, with only VAT changes officially announced so far. However, this is not the only measure that will be taken, but for now the Social Democrats and the Liberals have different fiscal visions.

Marian Neatsu, Nicolae Chuke and Marcel Cholaku in the governmentPhoto: AGERPRES

Prime Minister Marcel Călăcu said last week that in discussions with representatives of the European Commission, they indicated to Romanian governors that “there must be order” on VAT rates, canceling exemptions currently granted in several sectors, agreeing in principle that for food, medicine, medical devices such as prostheses, the rate should be set at 9%.

The cancellation of some tax benefits is also under discussion. “In the construction sector, if the decision remains to cancel (rather than dismiss) CASS, the minimum wage will increase to 4,500 lei,” government sources said.

The Liberals say a decision is needed as soon as possible to “end this tax hike hysteria as soon as possible.”

“It would be very good to distinguish between the speculations, rumors, maybe even proposals that have been at the public level in the last two or three weeks, and the decisions that will come later. At least in order not to scare the citizens or the economic sphere, it would be good to end this spiral, this hysteria about tax increases in the near future and think that all these things will be the decisions of the coalition, the government, probably in the next meetings,” PNL spokesman Jonutz Stroe said on Monday.

He showed that, from the point of view of budget expenditures, he prefers to clearly analyze what these sums allocated to state institutions at the moment mean, before publicly putting forward any decisions, clarifying that they concern both the central apparatus and institutions subordinate to the parliament.

What taxes does PSD offer?

In the PSD coalition, he proposed two measures that were agreed with the liberals:

  • excessive taxation of transfer amounts in the case of companies that transfer their profits abroad or offshore. Here the tax will be 15%
  • 1% tax on residential property worth more than €500,000

However, there are currently no further details on how properties worth more than €500,000 will be identified.

The following options were also discussed in the Coalition:

  • dividend tax increase from 8% to 10%
  • micro-enterprises that exceed 30% profitability, introduce a 1% turnover tax
  • reduction of the maximum amount for micro-enterprises with several options to EUR 250,000

These measures sparked heated debates between the PSD and the PNL, and there is still no political consensus.

PNL First Vice President Raresh Bohdan claims that PNL will not agree to a tax increase, but they may discuss the liquidation of some facilities.

What fiscal measures does PNL offer?

  • retention of 9% VAT on food and medicine
  • Increase of VAT for restaurants from 9% to 19%.
  • increasing the tax on sugar and carbonated drinks
  • increasing fees for gambling licenses
  • increasing taxes on alcohol and tobacco
  • VAT increase to 19% on animal feed
  • Payment of KAS for workers in construction, agriculture and food industry

Another measure that was discussed in the Coalition was the cancellation of vacation vouchers.