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December 9, 2022

Fiscal Code : The political class in search of consensus

The controversies surrounding the New Fiscal Code continue. On Monday, the Senators, summoned at the Palace of Parliament in order to take part in the extraordinary session on the New Fiscal Code, were turned back after the Senate’s Budget-Finances Commission’s meeting was cancelled because most of the Senators present decided that a political consensus is needed and party leaders have to reach an agreement and only after that should the request to re-examine the law be debated within the Commission. In parallel, before the extraordinary session, during a ruling coalition meeting at the PSD headquarters the Social-Democrats asked for a new round of talks between the leaders of the ruling coalition and of the opposition. The request was approved by those present.

Liviu Dragnea: “It’s more important to measure twice before cutting once”

At the end of the meeting, PSD Interim President Liviu Dragnea announced that the leaders of the coalition propose a meeting between the leaders of parliamentary parties on August 27, in order for them to reach a final political decision on the Fiscal Code. Dragnea added that he expects a final political decision and a final vote on the Fiscal Code during Parliament’s ordinary sitting, set to start on September 1.
The talks that took place at the PSD headquarters were attended by Premier Victor Ponta, Deputy Prime Minister Gabriel Oprea (UNPR), Senate Speaker Calin Popescu Tariceanu and Minister Daniel Constantin (ALDE).
“It was a technical meeting focusing on the Fiscal Code, the political decision will be taken by the leaders of the parliamentary parties. We cannot take a political decision today, it’s a far too important subject. The coalition’s proposal is that we should have a meeting of political leaders this week, possibly on Thursday, and we should take the political decision so as to vote on the President’s re-examination request during the normal sitting. Basically we can no longer talk about an extraordinary session of Parliament. It is much more important to measure twice before cutting once,” Dragnea explained.
Referring to the technical talks between the representatives of parliamentary parties, Liviu Dragnea claimed that no solution was reached and that the lowering of VAT in stages – to 20 per cent next year and to 19 per cent in 2017 – was only a Liberal proposal. UNPR agreed with PNL’s proposal to lower the VAT to 20 per cent on 1 January 2016, while ALDE continues to back the lowering of VAT to 19 per cent.
Likewise, Liviu Dragnea pointed out that Finance Minister Eugen Teodorovici was wrong when he expressed a political point of view following the technical meeting on Thursday, a meeting in which his mandate was solely “to listen and to offer all data requested.”
“Minister Teodorovici had a single mandate from me, to offer all data requested from him. Yes, he made a mistake (when he announced decisions on the Fiscal Code – editor’s note) because the meeting with political leaders is attended by political leaders and those who have a mandate,” Dragnea stated.

Alina Gorghiu: “It is for the first time when the coalition distances itself from Victor Ponta’s haste”

PNL Co-President Alina Gorghiu saluted the announcement made by Liviu Dragnea: “It is for the first time when the coalition distances itself from Victor Ponta’s haste and I am confident this change of attitude is the beginning. I don’t believe haste is a solution. We can wait one week, two weeks,” Alina Gorghiu emphasized.
“We will attend any talks on the Fiscal Code,” PNL Co-President Alina Gorghiu reiterated on B1TV, emphasizing at the same time: “We all seek this desideratum: a sustainable Fiscal Code in force for at least 10 years (…) Let’s take a decision that we could not attack the day after or next year.”
Catalin Boboc (PNL), Chairman of the Judiciary Commission, stated that the Liberals support the lowering of taxes and the hiking of Romanians’ incomes, however not when done in such an “abrupt and populist” manner as the one Premier Victor Ponta wants.
“Romania has stability and, after all, we don’t want to give up the stability that we have to maintain at all cost. If the Ponta Government proposes the lowering of budget revenues and states every day how he hikes salaries by significant percentages, we wonder if we can also afford this. PNL encourages measures meant to lower fiscality and wants the growth of incomes of all categories of Romanians, however we disagree with the idea that you promise hikes and three months later you discover you cannot do it. (…) We do not reject the idea, but we reject the abrupt and populist manner in which Ponta supports it,” Catalin Boboc stated.

Gabriel Oprea: “We will take a political decision”

UNPR President Gabriel Oprea, who attended the ruling coalition meeting, stated that he backs the postponement of the talks and of the vote on the request to re-examine the Fiscal Code.
“I can only state what my colleague, President Dragnea, stated. There were technical talks between specialists. UNPR too stated that technical talks between parties are needed, we will meet our opposition colleagues too, at the level of parliamentary party presidents, and we will take a political decision,” Oprea pointed out when asked about the postponement announced by PSD Interim President Liviu Dragnea.
He added that PNL Co-Presidents Vasile Blaga and Alina Gorghiu stated in their turn too that talks at the level of leaders will follow the technical meeting.
“PNL itself said, as did Mr. Blaga and Ms. Gorghiu, that talks at the level of leaders will follow a technical meeting. It’s a normal thing, the specialists met and now the meeting between the presidents of parliamentary parties will follow. In fact all parties have proposed that these technical talks should be followed by the natural meeting between political leaders for a decision to be taken,” Oprea claimed.

Calin Popescu Tariceanu: “It is probably more useful, wiser not to rush pointlessly”

Senate Speaker and ALDE President Calin Popescu Tariceanu agreed with the stances adopted by the leaders of PSD, UNPR and PNL on having new political consultations this week.
“Considering the various positions expressed, which were most times contradictory, I considered that it is probably more useful, wiser, not to rush pointlessly and to have another round of consultations, talks and analyses on the Fiscal Code, on the basis of data that should be offered by Finance Ministry specialists. The meeting last week was not convincing at all, BNR said that things remain unchanged in what concerns their analysis. (…) The session cannot take place, we will postpone the debate for next week, during the ordinary sitting,” the Senate Speaker added, emphasizing that as ALDE President he backs the Fiscal Code “in the form approved by Parliament.”

PM Victor Ponta: “I did my job”

Premier Victor Ponta did not seem displeased with the cancelling of Monday’s extraordinary session.
“I did my job – I placed a very good Fiscal Code on Parliament’s table and I am convinced it will be voted. Let them meet, let there be talks between political leaders,” Victor Ponta state when leaving the PSD headquarters.
Asked whether he is inconvenienced by this postponement, the Premier replied: “Not at all! Why should I be? Even if the Fiscal Code is adopted with a VAT of 20 per cent I am the happiest. I did my job.”
The Premier pointed out that other issues that have to be negotiated by party leaders will follow, such as “how we will conclude a new agreement with the IMF and international institutions, what is our choice as a country, development-wise, the MTO and the rest of the obligations.” “Is there anyone today thinking that it was good that salaries and pensions were cut in 2010? I personally believe it was wrong,” Victor Ponta stated.
Asked whether he will take part in the political negotiations scheduled on Thursday, the Head of Government answered negatively, stating that he will be in Chisinau at that time.

Kelemen Hunor: ‘Delay is better than rejection of re-examination request’

Hungarian Democratic Union of Romania (UDMR) chairman Kelemen Hunor has stated for Agerpres that he understands the decision to postpone the debates on the Fiscal Code, but mentioned that a solution must be found as soon as possible in order to avoid conveying a message of political instability and uncertainty to citizens, the business environment and international partners.
“I understood that, at the moment, within the coalition, there isn’t a political decision and that is why they have requested to postpone the debate and the voting, but we must see what are the arguments to delay, besides there not being a political decision (…) Indeed, after technical discussions there needs to be a political endorsement regarding last week’s technical solution and it must happen as soon as possible. In any case, delaying is much better than rejecting the re-examination request and I believe that within a few days this matter must be clarified, because it is not good for the coalition to send a message of political instability, or uncertainty towards citizens, the business environment and international partners,” Kelemen Hunor said.
The politician also stated that the Social Democratic Party (PSD) “must come up with a proposal, a solution, with another solution, with nuances, with arguments,” to make sure that the budget deficit limits for 2016-2017 are not exceeded and that there is enough room for maneuver to operate the VAT cut.
Kelemen Hunor also pointed out that UDMR still supports the reduction of the VAT to 19 or 20pct and the postponement of certain measures, so that the budget deficit targets and the economic macro stability are not threatened, while maintaining that the Union cannot act until a solution is found within the coalition.

Parties’ technical agreement was not enough

The New Fiscal Code has been the subject of heated controversies between the ruling power and the opposition in recent weeks.
The representatives of parliamentary parties had a technical meeting last Thursday at the Palace of Parliament, focusing on the Fiscal Code sent by President Iohannis back to Parliament for re-examination. They agreed that VAT should be lowered in two stages, through the amending of the Fiscal Code: to 20 per cent on 1 January 2016 and to 19 per cent on 1 January 2017. At the same time, they decided to postpone by a year the measure to eliminate the fuel over-excise, the decision set to be implemented in 2017 not in 2016 as initially stipulated. Finance Minister Eugen Teodorovici, present on Thursday at the technical talks, announced these changes but stated that the budget deficit target of 1.2 per cent of GDP could not be attained in this manner either.
On the other hand, PSD Interim President Liviu Dragnea stated on Saturday that a proposal, not a solution, was reached following the negotiations on the Fiscal Code.

PNL’s Blaga on delayed talks on Fiscal Code: “We hail the decision; all parties should agree”

Co-chair of the opposition National Liberal Party (PNL) Vasile Blaga on Monday hailed the delay in parliamentary debates on the Fiscal Code, saying that the code should enjoy the agreement of all political parties and stay in force as long as possible.

“The Senate followed the procedure, took into account the agreements among parties and rejected the agenda of the session so that we will discuss the Fiscal Code next week. We are hailing the decision, which proves how right the proposal I and [co-chair] Gorghiu made to parliamentary parties for talks on six themes, with the Fiscal Code being the first. We have proudly noticed today’s decision of Mr Dragnea to call on the finance minister and the labour minister to come up with clear arguments regarding the sustainability of public pay increases. We are also hailing the decision to discuss the Fiscal Code on Thursday, so that we may reach a formula, which I guess will be as close as possible to the one discussed in the technical province last week, so that we may get a Fiscal Code that will stay in force as long as possible. We say 10 years, but we are not sure as economies advance and other issues could emerge; at least there will be a Fiscal Code enjoying unanimous political backing,” Blaga said Monday at the Senate House.

Asked whether or not the agreement reached last week on the Tax Code could be reversed on Thursday, Blaga said, “I do not think so.”

He added that he noticed some differences in Finance Minister Teodorovici and Prime Minister Victor Ponta’s approaches of the Fiscal Code.

About the tax on special structures, Blaga said he will demand on Thursday that it be applied as from 2017 or levied in a differentiated manner, adding that the excise duty on alcohol should be cut.

“We did not discuss the surcharge on alcohol. We should discuss the matter because tax evasion in the province of alcohol is huge. If you take a look at sales, you will see that surgical spirit makes up the largest alcohol sales in Romania. How much are consuming? I believe that the excise duty on alcohol should be reduced,” Blaga explained.

Teodorovici: “Fiscal Code final form to be hammered out following Thursday’s political talks”

Finance Minister Eugen Teodorovici said that following the political leaders’ meeting scheduled for Thursday, August 27, the final form of the Fiscal Code will be hammered out for Parliament to adopt the new proposals next week, specifically the suggested 20 percent VAT and the one-year deferment of the scrapping of the extra excise on fuel.

“There was that technical discussion you already know about, with the two proposed measures, one to defer the extra excise, the other to have the 20 percent VAT as of January 1. So a political discussion of the political leaders is scheduled for Thursday and we’ll see exactly what the final form will be so that next week we can take it to Parliament,” said the Finance Minister.

He explained that this political meeting is necessary since this is a decision to be taken at the party and ruling coalition level.

Asked why he said last week that an agreement on the Fiscal Code had been reached and that therefore no political talks would be needed, Teodorovici explained that last week there had been a purely technical discussion from where the two measures proposed by the National Liberal Party had emerged.

“I said that was a technical discussion and that these were the couple of measures proposed by the Liberals, [the VAT cut and the extra excise],” said the Minister of Finance.

Teodorovici added that the extraordinary parliamentary session was not closed due to any unexpected occurrence.

“Nothing serious happened. I told you, talks at coalition level will be held on Thursday and we’ll make a relevant decision within the coalition, on what measures to refer to Parliament next week. (…) We, the Finance Ministry, voiced our opinion in our capacity as government structure, the ongoing talks deal with what I told you. We’ll see exactly if other measures will add to the two already specified,” the Minister said.

Teodorovici said talks with figures on the table had also taken place in the meeting of the National Standing Bureau of the Social Democratic Party, and that there is no problem in this regard.

“A discussion will take place on Thursday for us to see exactly what the final form is. No other measure was discussed apart from the already established two,” said the Minister.

Teodorovici mentioned that analyzes of the new Tax Code held after the technical discussion in Parliament focused on the new form of the Tax Code with the two measures added.

“There are different figures now, which, we’d say, look better, there are already savings to the 2016 state budget. So we said it, postponing the extra excise by one year and cutting the VAT in two steps to 20 percent and then to 19 percent, would bring about some potential savings for 2016. This was the only talk, nothing else,” said the Minister of Finance.

He added that the increase in the public servants’ wages and the planned measures in the new Fiscal Code are unrelated to one another.

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