Tensions in Romania’s ruling party caused by tighter taxation plans

Romania’s ruling coalition faces tensions caused by the imminent effects of the fiscal corrective measures on their electorate, which might shape the outcome of the multiple ballots scheduled for next year.

Although it is still premature, the scenario of a minority cabinet in the remaining period is not totally impossible, as one of the two parties might attempt to avoid the electoral cost of correcting the fiscal slippage.

Romania’s Social Democrat Prime Minister Marcel Ciolacu (PSD) reportedly warned he would resign if the Liberal Party (PNL) refuses to endorse the fiscal corrective measures that imply higher effective tax rates, according to G4media.

At the same time, former prime minister Nicolae Ciuca, who serves as head of the Liberal Party (in control of the Ministry of Finance), reportedly “rejected on the spot” the Social Democrats’ proposal of hiking the income and corporate tax rates by 2pp each to 12% and 18% respectively, according to employers’ representatives that are highly active alongside the Liberal Party on this matter.

The announced ordinances, expected to include austerity measures among the budgetary sector on the one hand and higher effective taxation on the other hand, are still under debate among the ruling coalition’s partners.

(Photo: Octav Ganea/ Inquam Photos)