The measure is aimed at reducing the risk of amassing new arrears, according to the country’s latest letter of intent to a EUR4 billion loan agreement with the IMF and the EU.
According to changes to be introduced in the Fiscal Code, the government will allow for local taxes for individuals to be raised by more than 20%.
Under current legislation, local authorities may raise local taxes for individuals and companies by no more than 20%.
The Cabinet will keep the 20% limit just for companies and allow local authorities to raise taxes for individuals by more than 20%.
In December 2012, the government issued a decision allowing local authorities to raise local taxes for 2013 by 16.05%, a result of their being indexed for inflation for the past three years. In January, the government passed a decree allowing local authorities to keep local taxes unchanged.
However, shortly after that, the Cabinet issued a new decree forcing local authorities with arrears to raise taxes. In a letter of intent to the International Monetary Fund, the Cabinet said it would make sure city halls that register arrears will increase local taxes by 16% to avoid amassing new debts.
Romania’s Government committed itself to keeping the budget deficit at around 2.2% of the GDP in 2014.
The fiscal measures the country will implement starting next year include: increasing excises on fuels, indexing excise duties for inflation, widening the property tax base and increasing royalty rates for mineral resources.
The Government will also increase the monthly minimum wage from 800 lei (EUR179) to RON850 starting January, and to RON900 starting the second half of 2014, aiming to collect higher income taxes. (EUR1=RON4.4536)