Progressive taxation not possible for the next two years, says Finance minister

Progressive taxation is not possible over the next two years as the National Fiscal Administration (ANAF) cannot apply a progressive income tax rate due to the application the tax authority is using, said on Thursday Finance minister Darius Valcov, according to Mediafax.

The government was aiming to introduce, during the current term, to the extent that the fiscal-budgetary frame allows it, the differentiated tax on wage income with fiscal deductibility, by applying rates of 8 percent, 12 percent and 16 percent, to be determined on income scales.

According to the draft Tax Code, flat tax will be cut from 16 percent to 14 percent as of January 2019.

The cut will decrease budget revenues by RON 4.8 billion (EUR 1 billion) in 2019, but will generate additional revenues amounting to RON 2.3 billion (EUR 516 million) from the VAT, social contributions, payroll tax and new jobs, the net budgetary impact being RON 2.5 billion (EUR 561 million).

According to Agerpres, on Wednesday, Valcov said the reduction of the VAT rate overall from 24 to 20 percent will be announced one month before enforcement, and the slash of the VAT on basic foods two weeks in advance.

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Staff