Government Passes Controversial Fiscal Measures Decree In Friday’s Meeting

Romanian Prime Minister Viorica Dancila said at the beginning of Friday’s cabinet meeting that the Government will pass a decree with new fiscal measures, including a tax on banking assets depending on the ROBOR rate, a cap for natural gas prices and lower management fees for private pensions funds.

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Imaginea articolului Government Passes Controversial Fiscal Measures Decree In Friday’s Meeting

Government Passes Controversial Fiscal Measures Decree In Friday’s Meeting

In her speech, the prime minister said that the measures will raise the quality of life for Romanians, but also fix incorrect energy and banking practices.

“We are approving today a set of measures which have the main goal of raising the quality of life for Romanians, the level of investments, and to correct some incorrect practices in the banking field and the energy field,” said Dancila.

The decree sees a new tax introduced for banks, who will have their assets taxed if the Romanian Interbank Offer Rate (ROBOR) is higher than 2%, with the cap raised from the initially announced 1.5%.

Internal natural gas and electricity prices will also be capped at a fixed level for the following three years for household consumers.

Another measure included in the decree is a reduction in the management fees of private pensions funds, which will be lowered from 2.5% to 1%.

The bill also instates a previously announced development and investments fund, which will be used to finance projects in health, education, local development and infrastructure.

The pensions point will grow from September 1, 2019 from RON1100 to RON1265, while the minimum pension will be raised at the same time from RON640 to RON704.

According to the prime minister, the timetable for wage raises in education was brought forward from an initially announced 2022 date to September 2020, while the gross minimum wage in the constructions sector will be raised to RON3000 starting with 2019 and taxes in the sector will be lowered to allow a net minimum income of EUR500.

Other measures announced by the chief of cabinet as included in decree are a program to construct 1000 kindergartens, the establishment of a fund to develop 31 spas and setting minimum levels of EUR1 billion for selling 5G licenses and EUR2 billion for renewing current 3G licenses.

The specific measures will be published with the decree at the end of Friday’s meeting.

Romania’s Economic and Social Council gave the decree a negative review on Wednesday, while the initial announcement of the measures – with slight differences from the version announced by Dancila – caused the Bucharest Stock Exchange to lose its whole year’s gain on Wednesday, and to suffer further drops on Thursday and Friday.

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