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February 1, 2023

Ponta II Cabinet economic programme: VAT back to 19 pc by 2016

Two other measures the Government promises to take in its 2013-2016 term are the progressive rise of minimum wage up to RON 1,200 and predictable tax policies.

The Ponta II Government commits to reduce VAT from 24 to 19 per cent by the end of its term in 2016, the measure being announced by USL at the beginning of the election campaign this winter. According to the ruling programme formally announced by the new Executive last Saturday, a differentiated value-added tax will be introduced for food. Another promise is to keep the current flat income tax of 16 per cent but to introduce ;in the course of the term’ a differentiated tax on the income from salaries with fiscal deductions, the proposed rates being 8, 12 and 16 per cent, per classes of income.  ‘The progressive increase of the minimum wage by 2016, to RON 1,200’ is also one of the measures the new Government promises to take. Labour Minister Mariana Campeanu said a time table for increasing the minimum wage will be set in the upcoming period, taking into consideration a first rise next year. Another priority of the ruling programme is the opening of 50,000 new places in the pre-school care and education system by 2016. At the same time, the Cabinet commits to resume the offering for the construction of reactors number three and four of the Cernavoda nuclear power station, continue the agreements with the foreign partners and comply with their provisions. The new Government intends to implement predictable fiscal policies, having in mind the continuation of the current agreements with three international financial institutions: the World Bank, the International Monetary Fund and the European Commission.  Among priorities there is also the alleviation of poverty for some 580,000 citizens by 2020. The Government anticipates 3 per cent economic growth every year until 2016 and notes it has fulfilled its promises and recovered what the PDL regime had taken away from Romanians. According to the ruling programme, the policy of repairing social injustice done by the former governments will continue by raising pensions by 4 per cent. Social security contributions will be reduced by 5 per cent for employers. ‘We are completely reducing the social security payable by employers during one year, which will hopefully create new jobs (the condition being that the employer must keep that workplace for another year)’, the document further notes. An equally important aspect is that the second Ponta Cabinet promises to restructure fiscal control institutions – ANAF, the Financial Squad and the Customs – and set up a supervision and audit council made up of international experts from the European Union. With these measures, the Government plans to simplify taxation and improve the fiscal competitiveness of the business environment. Under the agreement Romanian authorities have with the International Monetary Fund, the European Commission and the World Bank, the National Tax Authority (ANAF) will be reorganised in the next three years and the activity of the 221 tax administrations will be reorganised into eight regional departments and 47 local offices. After January 1, 2015, ANAF will have 47 tax administrations, one for every county and one for every Bucharest sector. According to the time table agreed with the international financiers, the main procedural improvements ANAF will implement in 2013-2016 are the increase of the rate of distance electronic submission of statements up to 98 per cent for legal entities, the introduction of a catalogue of services for tax-payers as well as quality standards in the area of tax-payer assistance.

75 pc of national road network to be modernised

Regarding the infrastructure, the in-coming Government promises that the Comarnic – Brasov and Sibiu – Ramnicu Valcea motorways are on the list of major infrastructure projects, as well as the completion of the Nadlac – Arad – Bucharest motorways to connect Romania to Europe (Corridor IV). Work will start on the West—East Targu Mures – Iasi – Ungheni motorway, on Pan-European Corridor IX – the Bucharest – Ploiesti – Focsani – Bacau – Pascani motorway, the beginning of the project of the South Bucharest – Alexandria – Craiova – Drobeta Turnu Severin – Timisoara motorway and the finalisation of the Bucharest orbital at motorway standard (North and South). The Ponta II Government also promises to modernise by 2016 75 per cent of the network of national roads and 5 per cent of the county roads, which are to be taken into the management of the Ministry of Transport for the duration of the improvement works, the restructuring of the National Company for Motorways and National Roads (CNADNR) and upgrading of the rail infrastructure. About 60 per cent of the approximately 15,000 km of railway will be brought to European standard in order to accommodate ‘an appropriate transport speed’. The ruling programme also includes the modernisation of the North Station in Bucharest and of the North Station in Timisoara.


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