Romania To Reduce VAT If Feasible Alternative Measure Found, Taxing Pensions Not Enough - PM

Boc said at the end of a meeting with Inspectorate for Emergency Situations representatives in flood-hit Tulcea, southeastern Romania, that the Government might reduce the VAT only if it finds feasible alternative measures, which must also be approved by the Parliament in order to be implemented.

Boc stressed that taxing all pensions cannot cover the revenues brought to the budget by the 5-percentage point VAT increase. The prime minister highlighted that, when authorities decided to hike the VAT from 19% to 24%, no alternative measure was on the table.

Romania's President Traian Basescu said Saturday, during a visit to flood-hit areas in the northeastern part of the country, that the value added tax must be decreased to its previous level, adding all pensions must be taxed.

Basescu said recently on the public radio that he hopes the Government would not resort to a new VAT hike in January 2011 without first taxing all types of income, including pensions.

The head of state said he does not agree with the Government's decision to raise the VAT, adding the measure was a mistake, as it does not tackle budget problems, especially those regarding wage spending and social spending, which are the state budget's "malign" spots.

The Government decided to hike the VAT from 19% to 24%, as an alternative solution to increase budget revenues, after the Constitutional Court ruled unconstitutional some provisions included in the country's first austerity plan, which had been pushed through the Parliament.

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