Romania shortlists fiscal corrective measures but hopes EC will accept milder target

Romania’s ruling coalition has shortlisted fiscal corrective measures but also envisages hiking the minimum statutory wage while also expecting finance minister Marcel Bolos to convince the European Commission to accept a higher deficit target compared to the 4.4%-of-GDP set under the budget planning drafted at the end of last year, Cursdeguvernare.ro reported.

Previously, the media circulated a scenario in which the EC experts visiting Romania accepted a marginal improvement from the 5.7%-of-GDP deficit reported last year but only if the correction from the 6%-7% gap under the no policy change scenario is achieved through structural measures.

The Romanian Government has outlined for the discussion among the ruling coalition members a series of fiscal measures, including scrapping the preferential VAT rate of 5% - to leave only the general rate of 19% and a single preferential rate of 9%, as well as eliminating the exemption from the payment of the health contribution for employees in the construction, agriculture and food industry, according to Profit.ro.

The minimum statutory gross wage in the construction sector would increase from RON 4,000 to RON 4,500 to compensate for the impact on the net wage, official sources said.

The Government is also considering increasing the tax on dividends from 8% to 10%.

Also, the Government wants the ruling coalition members to discuss the increase of the minimum statutory wage starting September this year, from RON 3,000 to RON 3,300.

In addition, the Executive wants to increase taxation for micro-enterprises and make PFA pay the health contribution to the real income, not capped as now.

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