Constantin added the state will not register losses from lowering the VAT on bread.
“As far as I am concerned, I believe we will have additional revenues to the state budget, even with a lower VAT, by fighting tax evasion. Our objective of lowering VAT from 24% to 9% on bread, flour and wheat for bakery products does not necessarily mean reducing bread price,” he added.
Constantin is convinced the International Monetary Fund’s representatives will agree with reducing the VAT on bread after the Finance Ministry presents them the calculations.
Mediafax has recently published a document saying that reducing the VAT on bread from 24% to 9% starting 2013 would have a significant impact on the state budget and, although in theory the measure may curb tax evasion in the bread industry, Romania must find other revenue resource to compensate for the loss.
The Romanian Finance Ministry said in a document drawn up last week that the country has not yet identified the revenue resources needed to offset the measure’s negative impact on the state budget. Without the revenues Romania cannot stay within the budget deficit target agreed on with international financial institutions, the document reads.