Romanian PM defends fuel tax, transporters warn of negative effects

Romanian PM defends fuel tax, transporters warn of negative effects


By Daniel Stroe – Bucharest

The Romanian social-democrat PM Victor Ponta has defended a fuel tax his government has introduced, which is in force as of today, arguing it helps finance large infrastructure projects, such as highways, and played down criticism coming from President Traian Basescu, his political arch-rival, who fiercely opposes the new tax and warns of negative effects on economy.

“Don’t think I am a masochist (Basescu called Ponta a sadistic in a press conference yesterday). If I could say: dear folks, there will be no tax in 2014, if I had this miraculous element, I would have done it. I have never and I will never apply a tax that will affect the ordinary citizens of this country, especially those with low income”, Ponta said last night in a talk-show.

“This money (the 7 Euro-cents fuel tax is expected to annually raise 2.5 billion lei – about 560 million Euros) will go to infrastructure, it will sustain projects” Ponta argued, rejecting Basescu’s claims the money serves only for the PM’s electoral objectives. Romania will hold presidential elections this November and Ponta is at this point seen as the favorite for Basescu’s successor. Ponta also pointed out that the newly introduced fuel tax will have no impact on farmers.

Trying to appease criticism from road transporters who warned they would fuel outside Romania and thus render Government’s math useless, Ponta yesterday passed a decision to return them 4 out of the 7 Euro-cents they pay extra for diesel. But both Basescu and experts warned the measure would create chaos and a new fiscal evasion niche. “The Fisk will get trucks of invoices from people who have never fueled and the government will return 4 Euro-cents, which will mean a heavy blow to the state’s budget” Basescu warned yesterday. “A fiscal evasion niche will thus be created” he added.

Ponta’s decision to return 4 Euro-cents will also incur administrative costs, the president pointed out. “The fiscal system will deal with something hard to manage; there will be high administrative costs. They will have to find public servants to check the receipts; this will be a titanic work” Basescu concluded.

Speaking to Hotnews, Dragos Anastasiu, president of Eurolines, one of the largest transport operators in Romania, warned the 7 Euro-cents tax will have a “devastating effect” for road transporters in the country. He also said the remaining 3 Euro-cents per liter will force companies to raise prices and will affect them, as concerns international transports, in the competition with airliners. On average, as of today, Romanians will pay 500 lei (110 Euros) more for fuel, studies show.