Romanian Govt, Social Partners Continue Talks On Anti-Crisis Measures

The proposals and measures forwarded by the workgroups are included in a centralized document of proposals targeting the "Common platform of anti-crisis measures."

The anti-crisis measures and proposals aim to earmark state funds for priority public sectors, such as education, research, defense, small and medium-sized enterprises (SMEs), which are regulated through special laws, as well as amend public procurement to curb public spending.

The list of measures also include the payment by deadline of all debts to the state budget and a balanced debt payment schedule on a monthly basis, in the first quarter of 2009, non-taxation of reinvested profit, an annual pollution tax for cars to observe the pollution level, and the enforcement of a proper taxation system for the income earned by employees facing technical unemployment, which must not consider this type of income as salary.

The measures also aim to halt, in time of crisis, the privatization of state-owned companies, to guarantee bank loans with state funds, to amend the law regulating gambling and revise taxes and dues in this sector, to include in the general consolidated budget the revenues of institutions and agencies, as well as to charge fees from private pension funds in order to cover the costs of the country’s pension house for the private pension system.

Other set of proposals target to earmark in 2009 at least the same amount of state funds earmarked in 2008 in order to promote exports (nearly EUR100 million) and to adjust the state contribution to finance this activity, as well as the possibility to compensate the recoverable VAT with the payable VAT or with other taxes to the state budget.

Other proposals also target to eliminate the road toll from the price of fuel used for other means of transport, other than the road transport, to set up a guarantee fund for cases when the state cannot fulfill its financial obligations or to alternatively use certain payment or compensation instruments between the state budget, the beneficiary of goods /services and the provider of goods/services for the liquid and exigible receivables of the three parties involved in the process, to continue taxation measures for the agricultural sector so as to gradually equal the flat tax with taxes on farming lands, to regulate VAT payment when cashing invoices, to re-analyze the legislation regulating dues and leases, applicable for future contracts, and to re-negotiate contracts, if possible.

The measures also target to stimulate the creation of minimum 50,000 jobs within small and medium-sized enterprises by granting state subsidies from the 2009 state budget for employers’ social security contributions when hiring a single person with the minimum wage of 1,000 lei (EUR1=RON4.2917), to identify 25 authorizations/approvals /licenses/ permits as the main burden for the business environment, and their gradual abolition, to redirect the country’s exports from the markets severely affected by the crisis towards emerging markets less affected by the crisis, by opening five centers for the promotion of public-private partnerships in Moscow, Beijing, Chisinau, Cairo, New Delhi, to generalize the non-taxation of reinvested profit and reinvested dividends, the exemption from the payment of contributions to the state budget and the social security budget in case of technical unemployment, but no longer than three months, to reduce patents assignment period and also cut taxes for patent applications by up to 75% .

As regards the country’s farming sector, some of the measures target to afforest nearly two million hectares of land , until 2025, and increase the national forest fund, over the next four years, to 30% of the country’s total surface (180 million hectares), to grant vouchers for the purchase of fertilizers and to assign at least 3.5% of gross domestic product for the country’s agricultural output.

Last week, the Romanian authorities set up three workgroups, jointly with unions and employers’ associations, to take economic and social protection measures in the fallout of the global financial crisis, which will be included in 2009 state budget.