UPDATE: The President says aa‚¬A“noaa‚¬A to VAT reduction

Update: As expected, President Traian Basescu announced this Monday on public television that he will not promulgate the two bills on VAT reduction to 5 percent for food essentials and the exemption of pensions below RON 2,000 from taxation. He added that he doesn’t believe that the bills were voted unanimously “by mistake”.

The President explained that he discussed the content of the two laws with IMF representatives. “I assured them that we will not change the fiscal regime which means that I will not promulgate the laws”, concluded Basescu.

The two bills will be sent back to Parliament for a new vote.

The Romanian Chamber of Deputies passed on Tuesday in unanimous vote the bills on lowering VAT for basic food items to 5 percent from 24 percent and on exempting pensions lower than RON 2,000 from income taxes. Although the two bills had been previously rejected by the Senate, the lower house has the final say. If President Traian Basescu promulgates the two bills, they will become valid after publishing in the Official Journal of Romania.

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The bills lack Government support, MPs from the ruling Democratic Liberal Party (PDL) explaining on Wednesday that they voted in favor by accident and will take measures to correct this “technical error”. Among those who voted in favor are Finance Minister Ghoerghe Ialomitianu, Minister of Labor Ioan Botis and Minister of Regional Development and Tourism Elena Udrea.

Simona Bazavan