IMF Shakes Finger At Romanian Tax Amendment Proposals

The International Monetary Fund analyzes all proposals that aim at changing taxes, but a change in the fiscal system may prove to be dangerous after some very difficult measures were implemented, said Jeffrey Franks, head of the IMF's mission to Bucharest.

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However, Franks said the IMF will carefully analyze all options to change the taxation system.

Romanian parliament has recently adopted a bill cutting to 5% from 24% the value added tax level for staple food. Lawmakers also adopted an amendment to the Tax Code that exempts small pensions from a 16% income tax.

On the other hand, the ruling Democrat Liberals want to cut the flat tax rate applied on corporate profits and personal income from its current level of 16% and reduce the social contributions.

The IMF is currently reviewing Romania's progress under the terms of a EUR13 billion agreement signed last year.

In 2010, Romanian government raised the VAT level by 5 percentage points to 24% and cut the public salaries by 25% in order to keep the budget deficit at levels agreed with the IMF.

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