PM Ponta says Gov't will decide on VAT cuts these days

Prime Minister Victor Ponta said Monday that the Government will these days decide on the cuts in the Value-Added Tax (VAT).

Photo credit: (c) Liviu SOVA / AGERPRES PHOTO

'We will complete all analyses today and I will have a conversation with the governor of the National Bank as well. Last week I informed Romania's President about the first quarter data in our possession. The new [Finance] Minister Mr Teodorovici has already talked with our partners from the International Monetary Fund and the European Commission, and we will make a decision today or tomorrow,' Ponta said at the Socialist Democratic Party (PSD) main offices in reply to a question about the VAT cuts.

He mentioned the Government revenue collection is exceeding expectations by far.

'Our collection is exceeding expectations by far; there is nearly RON 3-3.5 [million] in excess of what had been projected, so spending is smaller. This allows us to go further with the idea of tax unburdening related to the VAT, even before the coming into force of the Tax Code on January 1. This is 107 per cent over the projections. The rise in March alone was of 114 per cent. So the fight against tax evasion had effects,' added Ponta.

He said tax administration is much simpler for a standard tax than for differentiated brackets.

'If not the entire chain is involved, you generate some major malfunctions. Likewise, differentiating between products, that is from the most expensive to the least expensive, is almost impossible to do. There is no saying what luxury meat is and what ordinary meat is. So, from the point of view of tax administration, cutting the standard [VAT] from 24 per cent to 20 per cent is much easier to manage than some differentiated brackets. (...)...