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March 7, 2021

Baking industry employers threaten with tax strike unless black market is curbed

Baking industry employers say illegal bread market accounts for 70 per cent of the total production and threaten with a tax strike if VAT is not reduced from 24 to 9 per cent and if the state fails to check and deter illegal producers, according to Mediafax. If the two demands are not granted, bread producers say will go on fiscal strike. Aurel Popescu claims the high evasion rate is due to the very high VAT rate applied. The total bread market in Romania is believed to be worth some EUR 1.5 bn, and 70 of it is represented by the black market where no taxes are paid, Aurel Popescu, President of the Rompan banking industry employers’ association, said before a milling and banking conference organised yesterday. According to Popescu, because of the illegal market, in the first two months of the year, legal producers reported the highest loss in the latest years – 25 per cent. ‘Big bread makers have now lost extremely important market segments. They have just 30 per cent market share’, he added. Asked about the chance of a VAT reduction now that the IMF has showed reticence to the idea, Popescu says bakers can demonstrate the budget effort incurred would not exceed EUR 25 M. Producers would thus earn from better sales following the VAT cut. ‘We are even ready to pay that EUR 25 M if we have to we just want this to be done. We cannot go n like this anymore, I’m not joking’. Popescu further said. The chance of a lower bread VAT is slim as the IMF opposes the measure, although Bucharest officials have repeatedly promised a VAT reduction for bread. Agriculture Minister Daniel Constantin said in February that the reduction of VAT to 9 per cent for bread was a political commitment that might be fulfilled in the course of 2013, with a 6-month budget effort of RON 100 M.

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