Romania Should Keep Flat Tax, VAT Unchanged – Fmr PM

Tariceanu said the introduction of a 16% flat tax was a success for the Romanian economy because it allowed investors to reinvest more and the state to collect more money to the state budget.

"I believe the flat tax has been successful and it would be a mistake to discard it. With the flat tax, people do pay different amounts, because 16% is applied to incomes of 1,000, 10,000 or 100,000 lei, so it doesn't favor people with high incomes in any way," the former liberal leader said.

Asked whether he thinks the value added tax would be increased, Tariceanu said the country's democrat liberal government is likely to resort to such a solution but again, it would be wrong.

"This is a widely circulated rumor and it's probably one of the solutions the Government will apply. I think it would be a mistake because consumption shouldn't be chocked during a crisis, on the contrary, it should be encouraged, and higher VAT would choke it," Tariceanu said.

Tariceanu added the Government doesn't need to come up with Nobel prize-worthy solutions to restart the economy, but should apply solutions already tested by other countries and take essential measures to at least stop the economic decline if it can't afford fiscal incentives, stimulate consumption and make public investments.

The former prime minister criticized the government saying it sits around doing nothing and waiting for western economies to recover and drag Romania along.

"That ripple effect does work, but it's not enough," he said.

He added slashing jobs in the public sector is only a momentary solution and doesn't solve the country's problems in the long run.

Tariceanu also reiterated his opposition to the country's turning to the International Monetary Fund for help, which he refused to do as prime minister when the global crisis had begun to loom.

Recession-hit Romania is relying on a financial aid package of nearly EUR20 million from the International Monetary Fund, the European Union and the World Bank and has pledged to drastically slash public spending.

Romania's Finance Minister said Wednesday the country needs to expand the general taxation pool. Previously, the minister said no main taxes would be increased this year.

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