The reason behind European Commission (EC) and International Monetary Fund (IMF) opposition to the new changes in the Fiscal Code includes, besides the VAT cut related deficit, the fact that eliminating the tax on the special construction could mean a “hole” of about 160 million euro to the budget and the over-excise on fuel, of about 550 million euro, meaning a total of over 710 million annually, according to statements by officials and energynomics.ro calculations.
The Finance minister Eugen Teodorovici claims that EC officials have not reached to an agreement with the Romanian authorities on the Fiscal Code, but the Commission will decide on the meeting of Finance Ministers (Ecofin) on 14th of July what is status of the agreement with Romania. Meanwhile, the IMF will not make the evaluation visit initially scheduled for July, because it would already have the conclusions of the European Commission mission, said Teodorovici, quoted by Agerpres.
“We did not agree in one respect: the Fiscal Code. There will be the meeting at the Ecofin on July, 14, of the finance ministers and the International Monetary Fund certainly will not come (in July – e.n.) because it already has the conclusions of the European Commission. (…) For Ecofin, the team will prepare a report of the technical mission in Bucharest and by next week we will know its content before the meeting of finance ministers and we will formulate an opinion,” said Teodorovici.
“It is a normal approach from the European Commission. Instead, they appreciated very much what Romania has done in recent years as economic development measures, but the impact of the Fiscal Code is the main topic of discussion between us and the European Commission. (…) It might have been ideal to have an agreement by both sides for this project, so important for the Romanian economy. (…) It is important that whatever the situation, Romania has committed very clearly that it maintains those commitments, in particular in the area of structural reform”, said the Finance minister.
According to him, the budget deficit target will be exceeded temporarily, the estimated level being of 2.9% of GDP for 2016. Teodorovici argues, however, that it is possible to substantiate the 2016 budget to be possible a decrease from 2, 9% of GDP to 2.5% of the deficit.
The Finance minister pointed out that many countries have joined the excessive deficit procedure, with a deficit of over 3%, while Romania is in a situation where it has to take such measures in order to further strengthen the economy.
The adoption of the Fiscal Code is a step forward in clarifying the tax regime applicable in Romania, even if with regards to the Fiscal Procedure Code, there are a number of issues to be clarified, Vice President of CIS, Daniel Anghel, said.
However, since the business community, including Foreign Investors Council (CIS), welcomes the tax waiver on special construction (the pole tax) and fuel, but it is unlikely that an unfavorable decision of the IMF and the EC to the Tax Code will prevent dispensing with these two over-taxation measures.
