He said the IMF was not opposed to such a move in previous talks but asked the government to analyze the effects the lowered tax would have on the budget and find ways to make up for the diminished revenue.
Ponta said he backs a scheme in which 15% of the sales tax on food items would be returned to producers, in a bid to curb tax evasion in the agro-food sector. He said all EU countries, except Romania and Denmark, have a different VAT on food and the Romanian agro-food black market is currently estimated at 80%.
In summer, Agriculture Minister Daniel Constantin said the 2013 state budget would “surely” include a sales tax of just 9% on food. He said at that time that the move would help lower tax evasion by 15-20%.
At that time, IMF, European Commission, and World Bank officials did not agree with reducing VAT on basic foods and called for thorough impact studies by fall.
A joint delegation of the IMF, EC and WB will be in Romania between November 6 and 14 for a new assessment of the country’s precautionary loan agreement.