Romanian Govt Mulls Tax Raises After Court Rules Pension Cuts Unconstitutional - Sources

Romania’s Government is considering other ways to keep its budget deficit below the IMF-agreed cap of 6.8%, which mainly entails tax raises, including the VAT and flat tax, after the Constitution Court ruled pension cuts unconstitutional, people close to the matter told MEDIAFAX.

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The sources said the Government is to have a meeting Friday or in the upcoming days to discuss its "Plan B".

"The Government's Plan B, in case the Constitutional Court rejects the wage and pension cuts, mainly focuses on tax raises, including the flat tax and VAT," the sources said.

Leaders of the ruling Democratic Liberal Party met with Prime Minister Emil Boc Friday after the Constitutional Court ruled that some of the austerity measures for which the Government received a confidence vote in Parliament are unconstitutional.

Sources said the Court ruled that the provisions concerning the pensions of magistrates are unconstitutional, while those regarding other categories are open to interpretation, but do not require clarification in Parliament.

As per the Constitution, the provisions ruled unconstitutional must be made to conform with the Court's decision within 45 days.

Recession-hit Romania, which is relying on a EUR20 billion international rescue loan led by the International Monetary Fund, has pledged to drastically cut public spending and the Government has adopted laws cutting public sector wages by 25% and pensions by 15%.

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