Gov’t to postpone VAT cut, elimination of pole tax and over-excise upon Liviu Dragnea’s request

Gov’t to postpone VAT cut, elimination of pole tax and over-excise upon Liviu Dragnea’s request

The Dacian Ciolos government is to postpone by one year the implementation of the Tax Code amendments, i.e. the VAT cut from 20% to 19%, the elimination of the pole tax (tax on special constructions) and of the over-excise on fuel. The measures were requested by PSD leader Liviu Dragnea in a phone conversation with PM Dacian Cioloş.

“PM Dacian Ciolos has had a phone conversation with Liviu Dragnea regarding the bills the current government could adopt in the coming period, The PSD leader has expressed his wish to include on the list some bills for prorogation, which would lay pressure on next year’s budget,” government spokesman Liviu Iolu has said on Tuesday.

“The Prime Minister is considering extending these deadlines of the tax measures, because responsibility and predictability are needed. PM Cioloş will govern with responsibility until the last day of the mandate,” government spokesman Liviu Iolu said on Tuesday.

The decisions referred to by the PSD leader are: to postpone the elimination of the over-excise on fuels, maintaining the pole tax, not to approve the CASS capping, to postpone the VAT cut to 19% (PSD intends to cut the VAT to 18% as of 2018).

Liviu Dragnea said in an interview to that he has asked the incumbent Prime Minister to postpone the reduction or elimination of such taxes.

“I’ve told the Prime Minister that we will strictly enforce the Governing Programme presented during the election campaign and in this regard we asked him to consider the possibility of postponing for one year some provisions of the Tax Code. Thus, we have in the governing programme reduced VAT to 18% as of January 1, 2018 and maintaining the 20% level in 2017 because we believe that the VAT cut by only 1 percentage point this year will not bring any advantage neither to companies nor to consumers. Regarding the excise duty on fuel, we find that although the price of oil worldwide is at historic lows, in Romania the feeding pump price is the highest in the EU, and we are talking about the price without taxes, which I find very hard to explain. This makes us believe that a cut in excise duty without a serious discussion with the Competition Council risks not leading to a price cut for the final consumer.

Once we solve this situation together with the Competition Council we will cut the excise duty by 6% as of January 1, 2018 according to our governing programme. Another point of discussion was related to the special tax on constructions which will be removed when the major companies in Romania will understand that profits in Romania should be paid here – I mean the implementation of Directive 1164 of the EC and other measures to be approved so that companies pay taxes in Romania if they are achieved here.

Also, the capping of the health security insurance (CASS) does not correspond with our governing programme as we target a reduction and a pooling of contributions for the entire population and for the business environment as of January 1, 2018.

I’ve also asked the Premier to do everything possible to bring some of next year’s expenditures to this year. Here we are talking about the payment of arrears, farm subsidies or Romania’s contribution to the EU budget. I asked this because it is clear that this year the fiscal space is well above the set targets at the beginning of the year. The Premier said he will analyze the requests and give us an answer,” Liviu Dragnea has told

A press conference announced for Tuesday afternoon by PSD has been cancelled in the last minute, according to the local media./IBNA