President Basescu goes to great lengths to destroy the fuel excise tax

President Traian Basescu announced on Wednesday that he will write letters to all the deputies asking them to reject the proposal for the fuel excise tax hike and he already started with the head of the Chamber of Deputies, Valeriu Zgonea. Previously, on Tuesday evening, the President said in a special press conference that the budgetary strategy designed by the Government in partnership with IMF is flawed and must be immediately rectified.

“This is not a hoax. I am not dropping the excise subject. (…) The fiscal-budgetary strategy enforced by Ponta with IMF is wrong. I know this country well, I know how people and the economy react. I know how companies react in general so I will declare with all the responsibility of a president that the policies generated by the Goverment and accepted by the IMF are wrong for Romania and they must be immediately adjusted”, Basescu said Tuesday evening.

The president also added that, given the excise was introduced via Ordinance that wasn’t approved by the Parliament, he will send letters to the legislative chamber to refuse the law and then ask the Government to compensate with measures to reduce expenses. Traian Basescu offered examples in this direction. He reminded the journalists present of an excess at the Ministry of Development, led by Liviu Dragnea, where you could “easily cut RON 1.2 billion” in expenses. He also mentioned the “special building tax”, where you can get an extra RON 1 billion in revenue, and RON 700 million from the liberalization of the gas market.

“I am sorry, I’ve always had a partner in the IMF, but this time they are wrong. It is inconceivable to generate a fiscal policy to appease certain politicians, meaning taxes taxes taxes without any possibility to collect (…) I know there will be conspiracy theorists that will say this is a political game. It’s not (…) An IMF delegation will arrive in April, the Government should be ready for a new approach given that this policy will not give the results it needs”, the chief of state recommended.

After receiving the letter wherein Basescu asks the Parliament to reject the excise, Valeriu Zgonea, head of the Chamber of Deputies, replied on Wednesday that the president has no authority to tell members of the Parliament how to vote on a law. But he can always send back the law project for approving the Ordinance.

“He asks us not to vote on it? As a president? Only the Parliament has authority in matters of legislature. Mister Basescu can return a law project for an Ordinance to the Parliament or he can contest it at the Constitutional Court. There is no other avenue for him to intervene in the process”, Zgonea explained.

IMF is resolute in its determination that this is the only way that Romania can avoid a deficit explosion. After Ponta announced that the Government will pass an ordinance that would allow transporters to recuperate 4 euro cents from the 7 euro cents tax, IMF said on Tuesday that any exception to the excise must be compensated for.

“The fuel excise is an important element in attaining the deficit objective and any decision to grant exceptions for transporters or high-capacity trucks would create a fiscal void which would have to be compensated for with strong measures, so that the deficit for this year and next year can be covered”, Andrea Schaechter commented, in a phone-call from Washington.

If the Government would go ahead with their plan to “help out” transporters, it would create a budget-hole of RON 345 million, according to government estimates.