Social Democrats draft bill to cut taxation for low wages

Romania’s ruling Social Democratic Party (PSD) PSD has drafted a bill for the significant reduction of the tax burden for low-income employees, targeting salaries of up to RON 5,700 (EUR 1,140) in gross terms, which is some 54% above the current minimum statutory wage.

According to documents consulted by Profit, in the governing program that the PSD could announce in about a week, there is a proposal to reduce, from 2025, by five percentage points the tax burden on the low by increasing the personal deductions for the wages up to RON 5,700.

The personal deduction would also be extended to the calculation of the contributions to the public health system, in addition to the income tax. In addition to the direct impact on the sums received by employees, the measure could encourage the labour market, authors of the draft argue.

The impact of the fiscal measure would be 0.19% of GDP, around RON 3.8-4 bn, calculated at the estimated GDP for the year 2025.

PSD had consultations with unions and employers on October 3, and the message for them was that in 2025 the increase in taxation should be avoided.

PSD also promised to promote measures to reduce the tax burden for employees with low and medium incomes. No details of the prepared measure were provided following the meeting.

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