IMF mission head Andrea Schaechter said lowering VAT on bread was a decision of the Romanian Government, part of its budget revision, aiming to fight tax evasion. The measure is temporary and will be kept or reversed depending on the impact it has.
Finance Minister Daniel Chitoiu said earlier this week the negative impact on revenues brought by lowering the sales tax on bread will be countered by higher excises on alcohol and luxury items.
Prime Minister Victor Ponta said the IMF was skeptical the measure would indeed curb tax evasion but accepted the lower tax.
Meanwhile, major retailers in Romania said shelf prices for bread and bakery products will be lowered in direct proportion to the lower sales tax. The Association of Large Commercial Networks (AMRCR) said Wednesday it hopes the measure will be extended to cover other foods to stimulate consumption.