Romania parliament approves tax cutStaff writer ▼ | July 11, 2014
The Romanian parliament's lower house approved a 5 percentage point cut in social security taxes for employers that is intended to boost economic growth.The Romanian parliament's lower house approved a 5 percentage point cut in social security taxes for employers that is intended to boost economic growth.
The tax cut was approved last month by the government of Victor Ponta, going against a recommendation from the International Monetary Fund (IMF), which leads Romania's 4 billion euro aid deal. The lower house has the final say.
The IMF has postponed a review of the aid deal pending a November 2 presidential election that has raised concerns about fiscal discipline. The cut in employers' tax to 15.8 percent from October will create a revenue shortfall of 850 million lei ($264.61 million) which the government plans to cover with higher than expected returns from a tax on special buildings introduced this year.
The head of the Fiscal Council, an independent fiscal watchdog, has said revenues from the special building tax will not be sufficient, however, as overall tax collection fell behind estimates in the first quarter. ■