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January 28, 2022

Fin Min Teodorovici on budget rectification: No cuts from Transport, Health or Education Ministries. Under revision bill, Gov’t revenues to increase by 2.25 billion lei, expenses by 285.7 lei

The budget rectification does not entail funding cuts from ministries such as Transport, Health or Education, and the ministers are under the obligation to spend the allocated money, Minister of Public Finance Eugen Teodorovici told a Tuesday’s press conference.

As concerns the Ministry of Education he explained from where the reduction in funds that appears in the budget rectification comes.

“There are no cuts from education. It is (about) 1.02 billion lei, if I am not mistaken, and I tell you where this amount comes from, because at least those who have said so far should read a little more before making comments. There is 400 million lei, if I am not mistaken, on the salary side, because an overestimation was made at the beginning of the year and if you talk to everyone in the trade unions, because maybe you will believe them, you would see that the amounts are sufficient until the end of this year, so not until the second rectification, but until the end of the year. Further on, there is a project worth 450 million lei, if I am not mistaken, related to that program or measure with the school bags, the school supplies. You know that there is such a program at the Ministry of Education that I have also reimbursed from the European Funds, from that FEAD Program [the Fund for European Aid to the Most Deprived]. (…) Nothing will be affected. That is the conclusion,” said Eugen Teodorovici.

Moreover, the Ministry of Public Finance has stated that the Start-up Nation Program will not be affected, and this “goes on as planned, without any problem”.

The Ministry of Public Finance proposes a positive budget rectification, which ensures compliance with the 2.76pct limit of the budget deficit, the largest cuts being operated, according to the draft, at the Ministry of National Education, the Ministry of European Funds and the Ministry of Research.

The representatives of the Ministry of Public Finance say that the necessary amounts for the ongoing investment projects are being provided for, while the amounts allocated to the institutions with a low level of use of the allocated money are being reduced.

The Ministry of Public Finance reports that the Gross Domestic Product increased to 1,031 billion lei, compared to 1,022.5 billion lei as estimated at the substantiation of this year’s budget and that the budget rectification draft ensures the necessary amounts for the payment of pensions and salaries.


Teodorovici maintains need to increase tobacco excise duty


The increase of the tobacco excise duty was necessary for the harmonization of a European Directive, otherwise Romania risks triggering an infringement procedure, the Minister of Public Finance, Eugen Teodorovici, told a press conference on Tuesday adding that “he has no gift to levy taxes and duties.”

“As concerns the tobacco excise, it has to do with notifications received from the European Commission cautioning against the initiation of an infringement for Romania for failing to harmonize or to update with the respective directive. The Ministry of Finance does not – and I have told you again and again – I do not have the gift to levy taxes and duties. As much as some would strive to pin OUG 114 on me, no matter how much some of them would like, when discussing specifically, I mean specifically, they have no arguments. I do not like duties and taxes and I will not increase either their number or their amount. No matter how many crazy people write on Facebook, no matter how many inept people you will come across and will tell all sorts of things about me, they have no arguments. Ask them for concrete arguments,” said Eugen Teodorovici.

According to him, the notification came from the European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici.

The level of the total excise duty for cigarettes will be increased, starting with September 1, 2019, from 483.74 lei/1,000 cigarettes to 503.97 lei/1,000 cigarettes, according to the draft Ordinance for the regulation of fiscal-budgetary measures, published by the Ministry of Finance on Tuesday.

Moreover, for soft drinks the sugar content of which is between 5-8 g sugar/100 ml, the excise duty will be 0.8 lei/liter, and for those whose sugar content exceeds 8 g sugar/100 ml the excise duty is one leu (Romanian currency, ed.n.) per liter and will be payable by producers, importers or those who will purchase intra-Community, according to the same draft Ordinance.

The excise of soft drinks with high sugar content will bring additional revenues to the budget of 320 million lei (rd EUR 67 million) this year, the MFP maintains.

For its part, the National Soft Drinks Association (ANBR) stated, in a press release sent to AGERPRES last week, that the Government’s intention to introduce an additional duty for sugary soft drinks is a discriminatory and disproportionate measure because soft drinks represent, on average, only 3 percent of the daily caloric intake of an adult, and its sole purpose seems to be to boost the revenues to the state budget.


Under revision bill, Gov’t revenues to increase by 2.25 billion lei, expenses by 285.7 lei


In its latest budget revision bill, the Ministry of Public Finance (MFP) projects an increase by 2.251 billion lei in the 2019 government revenues and by 285.7 million lei in the public expenses.

According to the bill, published on Tuesday morning on the MFP website, in the case of revenues, the influence is mainly reflected on the following categories of income: profit tax +1.608 billion lei, as a result of measures taken by the National Tax Administration Agency (ANAF) and also of improved collection of tax on bank profits; other taxes on profit, income and capital gains of legal entities +86.2 million lei; other taxes on profit, income and capital gains of individuals + 130.8 million lei; rates and taxes on property +352.9 million lei, as a result of adding to the budget estimated revenues from tax on bank assets.

The value added tax (VAT) should reach projected level as a result of measures taken by ANAF in order to increase collection and compliance, but also of the effects of financial restructuring measures, which gives -2.9 billion lei representing amounts deducted from VAT for 2019 to finance the expenses of the local administrations.

In the case of excise duties, an additional 481.7 million lei is expected as a result of an increase in the total excise duties on cigarettes and the introduction of a tax on soft drinks with a high content of sugars in the category of products subject to non-harmonised excise duties; other general rates and taxes on goods and services should provide an additional 271.5 million lei.

In the chapter on taxes on the use of the goods, authorisation of the use of goods or on the conduct of activities a minus of 65.2 million lei is expected; in regard to the tax on foreign trade and international transactions a surplus of 67.3 million lei should be expected, while social security contributions should provide a plus of 79.8 million lei, and non-tax revenues should increase by more than 1.495 billion lei.

The amounts received from the European Union/other donors in payments and pre-financing related to the financial framework 2014-2020 should be down by 1.155 billion lei, while other amounts received from the EU for operational programmes under the convergence objective should go up 1.8 billion lei.

On the other hand, 2019 appropriations should increase by 285.7 million lei; the personnel expenses should decrease by 136.5 million lei; expenditures on goods and services should increase by 88 million lei; subsidy outlays should be cut by 381.3 million lei; transfers between public administration units should increase by 1.345 billion lei; other transfers by 1.222 billion lei; outlays for projects financed by post-accession non-reimbursable external funds should decrease by 170.9 million lei; social security expenses would be reduced by 421.4 million lei; outlays for projects financed by 2014-2020 post-accession non-reimbursable external funds should decrease by 1.867 billion lei; other expenses should increase by 62.3 million lei; reserve funds would be increased by 566.4 million lei; expenses related to programmes on reimbursable financing should decrease by 59.9 million lei; capital expenditures should decrease by 32.3 million lei; repayments of external and internal loans should increase by 70.6 million lei.

Government’s aggregate revenue is expected to increase by 3.752 billion lei.

The budgets of the general aggregate budget that should report increases of revenues are: the national budget + 2.251 billion lei; the local administration’s overall centralised budget + 3.719 billion lei; the unemployment insurance budget + 834.3 million lei; the budget of the Single National Health Insurance Fund +45.1 million lei. Decreases in revenues should occur in the social security budget – 1.442 billion lei and the budget of organisations/activities wholly and/or partially financed from own revenues – 415.6 million lei.

Government’s aggregate outlays should increase by 3.959 billion lei, and the cash deficit should stay at 2.76pct of the Gross Domestic Product (GDP) as originally established.

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