Romania’s Move To Cut VAT, Lift Pension Tax Calls For Careful Assessment - IMF

Romanian parliament’s decision to cut the value added tax for basic food items and lift a 16% tax on small pensions must be “carefully” analyzed to establish its possible effects on the economy, said Mihai Tanasescu, Romanian representative to the International Monetary Fund.

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Tanasescu said Romania and the IMF didn't discuss the measures before they were adopted in parliament.

"If this law comes into force, then we'll certainly discuss its consequences," Tanasescu said Wednesday.

Romanian MPs adopted earlier today a bill cutting to 5% from 24% the VAT level for bread, meat, milk, edible oil and sugar, in a move termed as "erroneous" by representatives of the ruling Democrat Liberal Party.

According to the democrat liberals, the MPs thought they were voting a committee report to reject the tax cut.

Separately on Wednesday, the parliament also adopted an amendment to the Tax Code that exempts small pensions from income tax.

The two laws will be sent to President Traian Basescu for promulgation.

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