Romanian oil industry association says the state budget will lose money in 2019 due to higher taxes

A Romanian oil industry association warn that the state budget will collect less money in 2019 as a consequence of higher taxes imposed by the government as the companies in the sector prepares to reduce production and investment, and freeze employment.

“Our members expect a reduction of the taxes paid to the state budget ranging between 30 percent and 60 percent, depending on the business model of each company,” the Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) said on Wednesday, in a press release.

Based on last year’s production, the state budget will lose around RON 2 billion (more than EUR 400, at the current exchange rate) in 2019 compared with 2018, according to the association.

Desperately needing money to finance its soaring expenses, the government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, and capped the retail and corporate gas price at RON 68/Mwh.

The government also imposed special taxes of 2 percent of turnover on energy firms and 3 percent on telecom companies.

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The government has not released until now a budget project for 2019 and many experts say it has no money to finance its soaring spending on public servants’ wages and pensions.

After the first 11 months of 2018, the public deficit was RON 26 billion (EUR 5.6 billion), or 2.74 percent of projected GDP. The deficit for the entire year 2018 was not yet released but some officials said that it hasn’t breached the European Union’s budget deficit ceiling of 3 percent of GDP.

The European Commission has recently established that Romania took no effective action in response to the Council recommendation of June and now proposes a revised recommendation of an annual structural adjustment of at least 1 percent of GDP in 2019.