Government considers excise increase

The government will consider raising excise duties, though there will be no increase in value added tax (VAT) as suggested by the International Monetary Fund (IMF), state minister Adriean Videanu told Reuters in an interview. Videanu explained that the decline in the budget revenues, caused by the introduction of the flat tax, would be largely offset by postponing the reduction of certain social security contributions and increasing dividend tax and micro enterprise profit tax. Revenues derived from tax are expected to drop by 1% of GDP following the tax cuts. The statement by the state minister comes after that by the IMF resident representative in Romania, Graeme Justice, at the end of last week, in which he said the expected IMF mission to Bucharest on January 26 would propose increasing VAT and speeding up the programme of aligning excise levels with those in the EU. The IMF sees this as the only solution to compensate for the loss of revenue that will be caused by introduction of the flat tax and to prevent outbursts of inflation. ZF