The head of state said in his reexamination request he supports fiscal relaxation through the reduction of certain taxes as long as conditions for fiscal consolidation and predictability are met, adding the country’s new Tax Code may be applied only after a thorough analysis of its overall impact on the 2016 state budget and beyond, while observing the country’s commitments.
He added tax cuts alone, not coupled with improved tax collection and sustainable public spending, would create deficits and imbalances that will hinder economic growth.
The Parliament is in recess until September but the president may summon it to assemble.
The Tax Code approved by the Parliament stipulates the VAT cut to 19%, the scrapping of special constructions tax and the fuel excise duty and not the lowering of social insurance tax rates and the flat rate tax cut initially proposed for 2018 and 2019.
The IMF and European Commission have warned Romania’s new Tax Code will create a significant fiscal deficit, which could prove difficult to correct.
Romanian central bank governor Mugur Isarescu said recently it would be wrong to ignore the lessons of the crisis and give way to the temptation of opting for measures with temporary consequences to the detriment of long-term development.