No consensus on turnover tax among Romania’s ruling coalition

The National Liberal Party (PNL), a junior partner in Romania’s ruling coalition, expressed its firm opposition to the idea of levying a 1% tax on the turnover of large-sized companies (with annual revenues over EUR 100 mln per year).

Realistically, it is improbable to see such a tax enforced even as of 2024 – even if the Social Democrats will take over the prime minister seat in May. Rising the corporate profit tax rate is a more realistic option for the Social Democrats, who will probably include the fiscal policy on their agenda ahead of the super-electoral year 2024.

The idea of a supplementary income tax for large companies was revived by the senior ruling partner, the Social Democratic Party (PSD), after it was previously discussed and abandoned at the end of 2021. In all fairness, PSD argued for “all the large companies to pay taxes in the amount of at least 1% of their turnover” and not for cumulative profit and income tax.

The Social Democrats argued that such a special tax would create fiscal space for lowering the labour taxation – among the highest in Europe. But the Liberals claim that the move would only discourage investors and, furthermore, it would result in higher prices of goods and services (as the companies transfer the new tax to consumers), Digi24 reported.

The revised Fiscal Code, as agreed upon by all the ruling coalition members and enforced as of 2023, has already eliminated a series of inequities, PNL also argued.

Finally, the Liberals express solidarity with those hit by the harsh economic circumstances but warned that the social protection policies should be more carefully designed in order not to produce adverse effects.

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