Foreign investors fear Romanian state will “take with two hands” what it gave them via social security tax cut

Foreign investors in Romania will not immediately free more resources for new investment or new jobs, as they are not yet convinced that the Government’s decision to cut social security tax (CAS) for employers by five percentage points will bring them the expected benefits in the last three months of 2014. They also fear that in 2015 “the state will take with two hands what it gave them with one hand” and that the Government will increase taxes, said Mihai Bogza, president of the Foreign Investor’s Council (FIC). He also said that in order for companies to decide on new investments and hire more people, the social security tax cut must be maintained for a long time and the other taxes should remain unchanged. Some private companies already adjusted their investment plans following the new taxes which the Government had introduced in the first part of this year. “In 2014, before the social security tax was cut, the Government first introduced or increased taxes, such as the new tax on special buildings or the increased excise for fuels. The CAS cut has only a marginal effect, for the last three months of this year. We can’t talk about the state freeing up resources for the private sector when the state has first drawn up resources from private companies to support the public sector, which is less efficient,” said Bogza, quoted by Mediafax. The law that cuts the social security tax paid by Romanian companies for their employees by five percentage points was signed by Romania’s president at the beginning of this week, after it was approved by the parliament for the second time. President Basescu initially had asked the parliament to review the law, which he considered unsustainable. Read also: Romania’s PM presents hypothetical sources to cover social security tax cut Romania’s budget stands to lose EUR 5 bln until 2018 from social security tax cut editor@romania-insider.com