Prime Minister Victor Ponta told Antena 3 private broadcaster on Sunday evening that his Cabinet has not set to compete for announcements of a smaller Value-Added Tax (VAT), adding that the measures in the draft Tax Code were drawn up after a one-year activity and in consultation with experts, the World Bank as well as the business community represented by the Coalition for Romania’s Development.
“That is just talking. We agreed on 20 per cent VAT, they said 19 per cent. Had we said 19 per cent, they would have said 18 per cent. Let us be serious! What we said was based on what we had talked with everybody, and also on figures. We are not playing ‘who gives less’ [a smaller VAT],” said Ponta in relation to the suggestion of the National Liberal Party (PNL) to have the VAT cut down to 19 per cent if a Liberal government comes to power.
About the drawing up of the draft Tax Code and Code of Tax Procedure, Ponta pointed out that the draft were not drawn up overnight, but after an activity conducted for the entire 2014.
“This Tax Code was not made overnight after working with friends at a weekend. There was work conducted the entire last year, 2014, with the Coalition for Romania’s Development, the World Bank, experts, because drawing up a new tax code and code of tax procedure is no easy task. When Finance Minister Darius Valcov came into office, he took over something that was as good as complete, but he took some important decisions (…) His big merit is he took some decisions which he can explain very well. In the context of a non-electoral year, 2015, we can actually implement it so that we may have predictability for the first time,” said Ponta.
Also taking part in the same show, Finance Minister Valcov explained that the envisaged VAT cuts as from January 1, 2016 included by the incumbent government in the draft Tax Code – namely a general VAT of 20 per cent and a special VAT of 9 per cent on meat products and vegetables- will give a median VAT of 17.6 per cent.
“The VAT on all that means meat, vegetables and fish will be cut down to 9 per cent, from a current 24 per cent. (…) That leads to our estimations of a 15-per cent cut in the shelf prices. (…) I saw yesterday that PNL wants a VAT of 19 per cent. Starting with January 1, 2016, we will have in fact a median VAT of 17.6 per cent,’ said Valcov.
Valcov explained that the 17.6-per cent VAT will be the outcome of the projected cut in general VAT from 24 per cent to 20 per cent as well as of the cuts in VAT on foodstuffs to 9 per cent and the cuts to 5 per cent in VAT on certain tourist products.