Romania may increase VAT to ensure a stable budget deficit
Friday, 09 Oct 2009
Romanian Times reported that Romania may increase the value added tax rate as of next year from the current 19% to ensure a budget deficit no higher than 5.9%.
Mr Gheorghe Pogea finance minister of Romania said that the move was necessary to ensure compliance with the country’s agreement with the International Monetary Fund.
He added that the 2010 draft budget did not include modified VAT levels yet, but that could change if the budget gap could not be kept under the agreed limit.
Mr Pogea reiterated that the government planned to reform the public revenue system in 2010 to increase its income, adding the flat tax would be kept at its current level of 16%. He noted that Romania currently has one of the lowest revenue to gross domestic product ratios of 31.8% while ratios in other countries in the region approach 40%.
Until now, government officials have repeatedly said increasing VAT or the flat tax was not part of its proposed measures.
