Government expands measures for shielding households and the economy from energy price hikes

Prime Minister Nicolae Ciuca said on Thursday, at the beginning of the government sitting, that the proposed amendments to OUG No. 27/2022 are intended to reinforce and expand the measures for shielding households and the economy from energy price hikes.

“Basically, the changes we will operate on the Government’s Ordinance No. 27 do nothing else but reinforce and expand the measures for the protection of the population and the economy from electricity and gas price rises. Once it is published in the Official Journal, the validity period of the ordinance is also extended. Virtually, we have extended it by one year and it will stay in effect until August 31, 2023. What we had in mind was to ensure the protection of the population and of the economy. 98 percent of households will benefit from this energy price cap/offsetting measure, and we estimate that they will thus be shielded from the increase in electricity and gas prices. At the same time, we considered it is important to take measures to scale up the resources allocated for this, and we have also taken measures to make sure that the internal market has the full amount of natural gas ensured and, of course, that all the electricity production capacities are functional, so that we can smoothly make it through the winter,” the Prime Minister said.

According to the draft ordinance amending and complementing OUG No. 27/2022 published on the website of the Energy Ministry, the electricity price cap for households applies for a consumption of up to 255 kWh per month, effective until August 31, 2023.

The draft stipulates that for the consumption registered between September 1, 2022 and August 31, 2023, the final capped price charged by electricity suppliers on household customers with an average monthly consumption in 2021 between 0 – 100 KWh shall be a maximum of 0.68 RON/kWh, VAT included; in the case of household customers with an average monthly consumption between 100.01 and 300 kWh, the final capped price is 0.80 RON/kWh, VAT included, for a maximum monthly consumption of 255 kWh. For an electricity consumption exceeding 255 KWh/month, the price is set by each individual supplier.


FinMin Caciu on cutting VAT on energy: We are interested in putting prices in a reasonable area


Finance Minister Adrian Caciu says that it is more important to act on the energy prices and bring them “into a reasonable area,” than to apply cuts in the Value-Added Tax (VAT).

“Perhaps the most important thing to do is to act on prices. I know that this question comes up related to tax cuts, especially VAT; I know that there is also a political party that supports it. Last year, all of Europe cut taxes. All European countries widened deficits. When you cut taxes, it means lower revenues. Deficits widened, public debt increased, there are historic public debts, which in fact call into question the entire fiscal pact that was adopted in 2010 and the measures unsuccessful, because energy prices continued to rise. What interests us first and foremost is to put energy prices in a reasonable area, because there were days when we had the highest prices in Europe,” Caciu said at the end of a government sitting on Thursday when asked why Romania cannot cut VAT on energy as many European countries have done.

He tried to explain with a mathematical example why such a measure is not supported.

“And I’ll give another simpler example, arithmetically, 19% of one hundred lei versus 5% of one hundred lei and you do the difference and you’ll see that you pay more if we only reduce the VAT, but we didn’t do anything with the base price,” added Caciu.

He was also asked if the analysis requested by the prime minister for tax exempting pensions under 3,000 lei was completed.

“The analysis was not only for the non-taxation threshold, but for everything that means the possibility of overtaxing the so-called special pensions. The analysis is completed, and probably soon the coalition will consider it appropriate to discuss it, because the relevant milestone in the National Recovery and Resilience Plan (PNRR) is coming up,” said the minister.

Regarding the stage of PNRR renegotiation, Caciu mentioned that things are at an advanced stage, but some issues still need to be clarified.


Compiled from Agerpres

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