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June 25, 2021

PM Ponta wants ‘special taxes’ for retailers who do not lower food prices

Premier Victor Ponta threatens that he will introduce “taxes so high” against retailers that will not lower prices after the lowering of VAT on foodstuffs “that they will lose everything they win in a speculative manner.”

At the start of the government meeting on Wednesday, Ponta asked the Agriculture Minister, Daniel Constantin and the representatives of the Competition Council and the National Authority for Consumers’ Protection to conduct an investigation until next week in order to find if the information presented by a part of the press, according to which several supermarkets have allegedly started to hike prices so that the VAT cut from 24 to 9 per cent would not lead to a real price cut, are true.

“Please check if the rumours in the press are true. If hypermarkets, traders, (…) are taking an advantage of the VAT cut to increase prices now so they can remain with the prices they want afterwards. (…) Please verify if there are non-competitive understandings and (…) propose legal and customary solutions in the European Union,” the Prime Minister said, in the beginning of the Government meeting on Wednesday, adding that he had heard “all kind of Liberal – Communist nonsense” proposing freezing the prices by emergency ordinance.

“We are in the EU, we are a market economy and we cannot freeze prices, as communists couldn’t freeze them either. However, we have the means to compel all those who operate on the Romanian market, through very clear and very tough measures, to observe the competitiveness principle and to implement starting from June 1 the price reduction as imposed through the VAT cut. (…) We can introduce special taxes for those taking advantage of this and I shall not hesitate to do so’, Victor Ponta said, without pointing out what the “special taxes” are.

“We shall introduce taxes so high that everything they win in a speculative manner they lose on the other side”, he threatened.

The representatives of large retailers were heard on Tuesday within the Agriculture Commission in order to explain whether they have resorted to price hikes lately, Agriculture Commission Chairman Nini Sapunaru pointing out that there are a lot of information about price hikes in stores and the public opinion is worried that the lowering of VAT will not lead to price drops. The representatives of retailers claimed they have not resorted to price hikes in the case of foodstuffs in view of the VAT being lowered and that the prices will drop by 12 per cent, Mediafax informs.


Fiscal Council President: Best strategy would have been to announce the measure shortly before its implementation


The price hikes implemented by retailers before the lowering of VAT on foodstuffs could have been avoided had the lowering of VAT been announced shortly before its implementation, Fiscal Council President Ionut Dumitru stated on Wednesday.

“The best strategy on lowering the VAT on foodstuffs would have been for an announcement to be made: starting tomorrow, in three days’ time or from the start of next month the VAT will drop, because we are already seeing talks about possible price hikes in anticipation of the lowering of VAT. Companies adapt and incorporate such measures in their decisions,” Ionut Dumitru stated on Wednesday at the Coface Country Risk Conference organized in partnership with Mediafax.

Ionut Dumitru pointed out that such a decision has to be adopted and announced rapidly, without too much “room for manoeuvre,” in order for it to have the hoped-for effect.

The Fiscal Council President deems that the very high aggressiveness in lowering taxes through the new Fiscal Code draft, followed by modifications and the cancellation of measures in Parliament can only contribute to overall lack of confidence.

“Companies and the population, seeing that there is uncertainty, that certain measures will be implemented or not, will think twice before hiring people. If the measure is not sustainable or credible, obviously it will not have the effect sought,” Ionut Dumitru added.

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