Romanian President Basescu Sends Controversial Bills Back To Parliament

Both bills were recently passed by the Parliament’s lower chamber, allegedly „by mistake.” One sets the VAT on basic foods, such as bread, milk, meat, sugar and vegetable oil, at 5% instead of 24%. The other bill exempts pensions lower than 2,000 lei (EUR1=RON4.2848) from income taxes.

Basescu argued that the effects of both bills would be lower budget revenue and, consequently, a growing budget deficit, which would stray outside the government’s targets for this year and the next (6.8% and 4.4%, respectively).

In addition, the President said, changing the value of the VAT so soon after it was increased to 24% would entail a loss of fiscal and legislative predictability, as well as cost Romania the trust of investors and its credibility before the international institutions providing the country with a EUR20 billion lifeline.