Agricultural minister-designate proposes 9 percent VAT for bakery products

Cutting VAT on bakery products from the present 24 percent to 9 percent would draw “hundreds of millions” to the state budget from the black market, said Daniel Constantin, the agricultural minister-designate last Friday, according to Mediafax newswire

The measure would reduce tax evasion on bakery products from its present level of 60 percent of the total market, he said. The additional money generated for the state budget is necessary for improvements in the agricultural sector as well as other investments, Constantin added.

“The proposal to cut VAT on staples to 9 percent is a commitment we have been discussing for a very long time and it remains to be decided, with the Ministry of Finance, when to introduce this proposition. I wanted to set an example this year towards the end of the year for the bakery industry – even though we are under pressure to meet the budget deficit target,” said Constantin, according to Mediafax.

PM-designate Victor Ponta said the same day that cutting the VAT was a necessary measure that would be included in the state draft budget “at the latest” for 2013. Ponta added that he supports reducing VAT on food as this would reduce tax evasion, support local producers, and on the medium term also increase the revenues to the state budget.

Asked whether the Finance Ministry supports the change, Ponta said that while the ministry is generally skeptical about tax cuts, its responsibility will be to come up with a date when the measure can be implemented.

Commenting on the proposed tax cut, former agriculture minister Stelian Fuia said at a press conference last Friday that while it would help fight tax evasion it would not reduce shelf prices.

Simona Bazavan