The City Hall of Iasi, a large city in Eastern Romania, intends to attack in court the Emergency Ordinance amending the Fiscal Code, according to mayor Mihai Chirica.

"There is a flagrant violation of a legality framework for local autonomy. Local authorities should be consulted on how resources are allocated,” the mayor said, reports local Digi24.

Iasi City Hall will first address to the Ombudsman, and will also ask for support from the High Court of Cassation and Justice and the Ministry of Justice, as they “can take steps to the Constitutional Court to block the Ordinance or find a reasonable solution to cover the deficit.”

“The impact is very high, tens of millions of euros damage to the local budget in 2018, so over 40% of its own income. Nobody asked us how we pay our debts to banks, we are in the stage of co-financing a European program, and the other credits we have to support. Nobody asked us what we do with the investments, commitments that we have undertaken. No one asked us about the obligations to education, health,” Chirica added.

Iasi mayor’s statement comes after the government has adopted a series of changes to the Fiscal Code, which also include a drop from 16% to 10% in the tax on individual income, in addition to the social contribution transfer from the employer to the employee starting January 1. This would affect the cities’ budgets as about half of their revenues come from the income tax paid by their citizens, mayors explained. They asked Prime Minister Mihai Tudose to find ways to compensate for the lost revenues. Tudose promised them to find a solution.

However, the mayor of Iasi was not convinced by the government's promised compensation, so the municipalities would not have a smaller budget next year.

Dozens of mayors and deputy mayors representing the National Liberal Party (PNL) in Arad protested on Monday, November 13, against the tax measures adopted by the government. They demanded the cabinet led by Prime Minister Tudose to postpone the application of the amendments made by the Emergency Ordinance or to allocate compensatory amounts to the local administrations, reports local News.ro. The mayors said that the Arad County would lose RON 167 million (some EUR 36 million), and the functioning of local administrations would be seriously affected by the tax changes.

City halls in Romania see budgets shrink with planned fiscal changes

Irina Marica, irina.marica@romania-insider.com