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Romanian Deputy PM Says Govt Likely To Hike Flat Tax, VAT

Romanian deputy prime minister Marko Bela said Friday the Government must conform with the Constitutional Court ruling on its austerity measures and seek other ways to keep the deficit in check, likely by hiking the flat tax and the VAT.
Romanian Deputy PM Says Govt Likely To Hike Flat Tax, VAT
25 iun. 2010, 13:30, English

Marko said a Cabinet meeting will likely be held Friday evening to discuss new measures.

„I don’t want to anticipate any decisions, but there are no other considerable revenue-boosting sources other than VAT and the flat tax. We’ve tried to avoid raising these taxes, but we might have to go back to that solution,” Marko said.

Romania’s Constitutional Court on Friday ruled planned pension cuts unconstitutional, which leaves the Government unable to apply any of the measures in its austerity plan, as the bills must be returned to Parliament to be made to agree with the Constitution.

This state of affairs threatens to delay the disbursement of a new installment of the EUR20 billion rescue loan agreed upon last year with the International Monetary Fund and other international institutions.

Consequently, the Government is forced to find other solutions to reduce public expenditure or switch to the so-called „plan B.” People close to the matter told MEDIAFAX earlier Friday the Executive is considering tax hikes to keep the budget deficit below the IMF-agreed cap of 6.8% of GDP.