Flat tax will not budge, Tariceanu says

Premier Calin Popescu Tariceanu yesterday announced he intended to maintain the flat tax as it is until the end of his term as the head of the Government. “I will maintain the flat tax both in terms of percentage and in terms of system,” Tariceanu told Mediafax. A series of European Commission experts have recommended Romania to increase either of the two main taxes, that is the VAT or the flat income tax as of next year, Leonard Orban, state secretary with the Ministry of European Integration and chief negotiator with the EU has recently stated. At the end of February, the European Commissioner for Economic and Monetary Affairs, Joaquin Almunia, stated the reduction of taxes was not a good thing. He added Romania would have trouble if the collection and tax levels were not reconciled with the revenue needs of the budget. Almunia at the time recommended the fiscal authorities to consider increasing taxes to a level that would ensure a higher amount of state budget revenues for Romania. The International Monetary Fund experts in turn recommended the Government to raise either the VAT or the flat tax, as ways to boost budgetary revenue. The 16% flat tax was introduced on January 1, 2005, replacing the 25% profit tax for companies and the tax brackets system ranging from 18% to 40% depending on incomes for individuals. ZF