Romanian PM Says VAT Cut For Basic Food Cannot Be Operated

The official explained that cutting the VAT for basic food products has to be compensated by a rise in other taxes. He added the Senate would not resort to the alternative giving this is an electoral year.

Tariceanu said VAT for basic food products would not be lowered as there are no other means to counter the measure. 

Three weeks ago, the Senate enacted a legislative initiative stipulating a 5% cut of the value added tax for basic food – bread, meat, milk, vegetal oil and sugar.  However, the Chamber of Deputies is the decisional forum in the matter.

The funds to cover the VAT cut would come from a 50% rise of the excises for yachts, other leisure ships and vessels, private aircraft and choppers and for related engines over 25 HP.

Additional funds will come from higher excises for tobacco, natural fur textiles, crystals, gold jewelry, perfumes, weapons and hunting weapons etc.

Tariceanu said at the time that the finance ministry will appeal the act at the Constitutional Court, as, if adopted, the decision would trigger lower revenues to the budget and would leave food prices unchanged.