Romanian president defers responsibility for VAT tax hike to the government

During a press conference held on Monday, July 14, Romanian president Nicușor Dan defended the recent tax hikes enacted by the government, underlining the need to reassure creditors and lower the country’s public debt. Nevertheless, he said that the VAT increase was decided by the government.

In the presidential campaign, then-candidate Nicușor Dan promised to not raise the VAT, a measure that was nevertheless taken despite his initial opposition.

Specifically, Dan claims that “the government’s commitment, at the time it was invested, was that VAT would not increase and that we would have a reevaluation in October. [...] A set of measures and discussions with the European Commission, with the rating agencies, was needed, and the measure might not have had to be taken at this time.”

Dan specified that he conditioned the appointment of the prime minister on avoiding the increase of VAT, as he had promised during the electoral campaign.

“In that month I had before appointing the prime minister, I looked into a lot of financial data, and with full knowledge, I had a discussion with the coalition and the designated prime minister. That was the understanding at the time of forming the government, for the corrections to be made while keeping VAT at 19%,” he said.

The president further said that upon appointing the leader of the National Liberal Party, Ilie Bolojan, as prime minister, the measures needed to address the deficit fell under the government’s responsibilities.

Nicușor Dan also addressed the public debate regarding the timing of the tax hikes. Numerous critics had stated that the government should have first started with reducing its own expenditures before burdening the private sector with more taxes. The president said that the tax hikes came due to the pressure of financial markets, “which had been exposed for years to Romania’s unfulfilled promises to cut spending.”

He insisted that the tax increases are temporary, and that the national economy has room to grow.

“As I have said, by the end of 2026 we will join the OECD if we do not make mistakes, and Romania will be attractive to foreign investors. I want to assure investors and the markets that we are serious people. We promised to do the reforms and we will do them,” he said.

Dan also said that a reduction in public expenses - including the some 200 bonuses that numerous public employees enjoy - will be put into place in time.