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December 1, 2020
ECONOMY FINANCE&BANKING POLITICS

Fiscal Code: Iohannis-Ponta-Isarescu reach major deal on VAT reduction

Prime Minister Victor Ponta on Wednesday said that in order for the economic development to continue, the new Fiscal Code must clear Parliament next week and be promulgated by the President, including the provision on the general VAT of 20 percent instead of 19 percent.

PM Ponta: It is very important to have Fiscal Code with 20pct VAT approved next week

“I want to take further the most important objective: to have economic growth. After the first half of the year, 3.7 percent economic growth I believe it is a pretty good thing, and I say it with modesty. (…) From this point of view, it is very important that next week the political battle cease and we have the Tax Code approved by Parliament and promulgated by the President. I still believe, as a technocrat, together with Mr Teodorovici, that it is important to send the fundamental message to the economy in the social area, too, with 20 percent VAT, not 19 percent. A 20 percent general VAT, with 9 percent for foodstuffs means an average of 16 percent,” the Ponta said at the beginning of a Government meeting.
Ponta added that the rest of the measures included in the new Fiscal Code regarding “fees and taxes can be discussed by politicians.” “What is important to us is the 20-percent VAT.”
The prime minister pointed out that he also discussed the issue with President Klaus Iohannis. “I have also discussed this with President Klaus Iohannis and with BNR [National Bank of Romania] Governor, Mr Isarescu, and I hope that the political leaders, Parliament take our technocrat opinion into account, so that we have a Fiscal Code and economic stability, jobs continue to be created, salaries may increase and prices may go down through the VAT reduction,” Ponta explained.
According to Ponta, the four VAT percentage points, which mean seven billion lei negative impact, do not represent a problem at any rate for a growing economy, as in the first six months of the year the an additional amount of 10 billion lei was collected to the national budget.
“Therefore, next year we shall definitely collect seven [billion lei]. I also believe that a political consensus will help us, those implementing the code, go in the same direction and from this point of view I am glad when there are reasonable solutions,” Ponta said.

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