Romanian Govt Pledges To Eliminate Income Tax Exemptions For Computer Programmers

A draft emergency ordinance amending the Romanian Tax Code, which was drawn up in May, stipulated that income gained by computer programmers would be taxed. The proposition was strongly criticized by companies in the IT field, which said that the income tax exemption computer programmers had enjoyed since 2001 was one of the measures that contributed to the country's economic growth. The Finance Ministry said back then that the income tax exemption would be maintained and that its elimination was included neither in the letter of intent to the International Monetary Fund nor in the memorandum to the EU.

The additional Memorandum of Understanding agreed with the EU was approved by the Government Wednesday and lists the measures Romania must implement in order to receive the third installment of a loan from the EU.

The document reads Romania must continue to reorganize positions in the public sector in the upcoming months and observe the 2010 target regarding costs with goods and services.

The Government said it will reduce the total number of employees in the public sector to 1.29 million at the beginning of 2011, so that the public sector salary fund should not exceed 39 billion lei (EUR1=RON4.2723) next year. The memorandum reads Romania will eliminate the 13th monthly salary granted to employees in the public sector. The Parliament is also expected to approve the unitary pension bill by the end of September 2010.

The Government pledged to reduce by 2.5%, staring with the third quarter of 2010, the arrears of ten of the state-owned companies that register big losses, as well as start privatization or closedown procedures for thermal power producer Termoelectrica and freight railway company CFR Marfa.

The Romanian authorities pledged to introduce the co-payment system for healthcare services and said exemptions from co-payment will not exceed 40% of patients.

Romania and the IMF last year signed a EUR13 billion loan agreement, part of a larger EUR20 billion aid package that includes funds from the EU and other international lenders. Joint teams from the EU and the IMF were in Bucharest between July 26 and August 4 for the fifth review of the agreement. So far, Romania has received EUR10.7 billion from the Fund, EUR2.5 billion from the European Commission and EUR300 million from the World Bank.

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