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Romania to raise VAT to 24 pct to curb deficit (court blocked attempt to cut pensions by 15%)
AFP on Yahoo ^ | 6/26/10 | AFP

Posted on 06/26/2010 9:51:04 AM PDT by NormsRevenge

BUCHAREST (AFP) – Romania will raise the VAT tax levied on goods and services to 24 percent from 19 percent to curb the public deficit and obtain a crucial IMF loan disbursement, Prime Minister Emil Boc said on Saturday.

The move comes after a court on Friday blocked the government's plan to cut pensions by 15 percent in 2010, leading the International Monetary Fund to postpone the unlocking of a new tranche that was due on Monday.

"The government has decided to raise the VAT tax by five points", Boc told a press conference.

"Under these conditions, the agreement with the IMF will continue", he said, adding that the IMF board was now expected to meet on Wednesday to give the green light to a new disbursement for the crisis-hit Balkan country.

Romania has previously agreed with the IMF and the European Commission to narrow its public deficit from 7.2 percent of output to 6.8 percent in 2010.

The VAT-tax hike will be implemented from July 1, Boc said. It should ensure between 3.5 to 4 billion-lei extra revenues in 2010 (820 to 940 million euros), Finance minister Sebastian Vladescu told reporters.

(Excerpt) Read more at news.yahoo.com ...


TOPICS: Business/Economy; Foreign Affairs; Government; Politics/Elections
KEYWORDS: romania; vat

1 posted on 06/26/2010 9:51:06 AM PDT by NormsRevenge
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Romanians scuffle with gendarmes in front of the Cotroceni Palace, the Romanian Presidential headquarters, in Bucharest on June 25 during a protest against cuts. Romania will raise the VAT tax to 24 percent from 19 percent in order to curb the public deficit and obtain a crucial IMF loan disbursement, Prime Minister Emil Boc has said. (AFP/Daniel Mihailescu)


2 posted on 06/26/2010 9:52:28 AM PDT by NormsRevenge (Semper Fi ... Godspeed .. Monthly Donor Onboard)
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To: NormsRevenge

And our government wants us to agree to a VAT? No way!


3 posted on 06/26/2010 9:58:37 AM PDT by RC2
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To: NormsRevenge

You don’t want to make the Romanians mad.


4 posted on 06/26/2010 10:00:32 AM PDT by dfwgator
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To: NormsRevenge

They did not shoot enough of the communists in 1989.

Communists are like any other malignant tumor - you have to get them all, or you will arrive back at the same problem.


5 posted on 06/26/2010 10:01:46 AM PDT by Psalm 144 (Let me be clear. The voluntary pancipation of Cinco de Quatro is mandated in all 57 states.)
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To: RC2

There is plenty of waste to cut at the federal, state and local level. Before they cut pensions, they need to cut PBS funding by 100%, along with ALL funding to any local community organizations. Let them compete locally for tax dollars.


6 posted on 06/26/2010 10:01:50 AM PDT by MSF BU (++)
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To: NormsRevenge

It will be interesting to see how this plays out.

I wonder what kind of underground economy they have in Romania?

http://www.actmedia.eu/2010/06/14/top+story/underground+economy+draws+near+50+bln+euros+/27921


7 posted on 06/26/2010 10:01:55 AM PDT by smokingfrog ( - Eccl. 10:18 -)
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To: smokingfrog

A VAT would capture a lot revenue from folks in the black economy; the problem is that much of it would be wasted, as it is now.


8 posted on 06/26/2010 10:04:27 AM PDT by MSF BU (++)
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To: NormsRevenge

If raising the VAT solves the problem, then raise it to 100%. /Kenyan economics


9 posted on 06/26/2010 10:06:44 AM PDT by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: NormsRevenge

A 24% VAT is horrendous.

How does Europe think it will ever have a thriving economy?

Oh wait, they think truly thriving economies are dangerous. I keep forgetting that.


10 posted on 06/26/2010 10:07:09 AM PDT by GeronL (Just say NO to conservativecave.com, it rots your teeth!)
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To: NormsRevenge

what court was it? A “European” court? A world court?


11 posted on 06/26/2010 10:08:32 AM PDT by GeronL (Just say NO to conservativecave.com, it rots your teeth!)
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To: RC2

“And our government wants us to agree to a VAT? No way!”

This story shows why. The courts (to the degree entitlements are defined as “rights”) and politicians will ensure that actual spending cuts are minimal, notwithstanding all the “waste” in government. After all, one man’s waste is another’s income that won’t be given up without a fierce fight.

So the path of least resistance will always be to keep raising the VAT. It’s less visible than income or payroll taxes and has the additional advantage that you can offload part of the burden onto other countries via their tourists etc.

Fiscal conservatives view steadily rising VATs as a problem, but progressives who have always believed in bigger government, merely view it as the best way to extract the most tax resources with the less squawking.

Well before Obama was elected, Rahm Emanuel’s brother Zeke was shopping around a health reform plan in which the entire health system would be funded by a dedicated VAT. Having a dedicated VAT was to ensure health care didn’t have to “compete” for general fund revenues with other public programs such as defense or criminal justice. Using a VAT rather than dedicated payroll tax made it easier to steadily increase the rate as growth in health care predictably kept outstripping the rate of growth in the economy.


12 posted on 06/26/2010 10:11:17 AM PDT by DrC
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To: Psalm 144

In a lot of these countries, Russia didn’t need the troops to have control.

Plus the fact that the UK & US governments were just about as pentrated as the DDR’s. So why the troops..


13 posted on 06/26/2010 10:11:27 AM PDT by chuck_the_tv_out ( <<< click my name: now featuring Freeper classifieds)
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To: MSF BU
"A VAT would capture a lot revenue from folks in the black economy"

How so? Why would a VAT, or any tax, capture revenue from the distribution of illegal goods, in a illegal supply chain, illegally distributed to retail buyers?

It seems to me that one of the primary goals of the black market is to avoid things precisely like VATs.

14 posted on 06/26/2010 10:22:22 AM PDT by OldDeckHand
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To: dfwgator
You don’t want to make the Romanians mad. _____________________________ Nope. From Mehmed II to Nicolae Ceauşescu, and even before, the Romanians have been griefing tyrants with a flair. The Romans managed to defeat them, but only after issuing special plate armor to the legions.
15 posted on 06/26/2010 10:23:29 AM PDT by Psalm 144 (Let me be clear. The voluntary pancipation of Cinco de Quatro is mandated in all 57 states.)
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To: Psalm 144

Nothing like some good old-fashioned “Romanian Term Limits.”


16 posted on 06/26/2010 10:25:14 AM PDT by dfwgator
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To: RC2
And our government wants us to agree to a VAT? No way!

We already have a VAT.

It's called the corporate income tax, and it's the highest in the world.

17 posted on 06/26/2010 10:26:38 AM PDT by E. Pluribus Unum ("The only stable state is the one in which all men are equal before the law." -- Aristotle)
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To: GeronL

If you have a VAT that high I would think finished foreign goods would often be cheaper.


18 posted on 06/26/2010 10:39:52 AM PDT by craigster_nc
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To: craigster_nc

So they will be destroying any and all manufacturing


19 posted on 06/26/2010 10:44:22 AM PDT by GeronL (Just say NO to conservativecave.com, it rots your teeth!)
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To: OldDeckHand
How so? Why would a VAT, or any tax, capture revenue from the distribution of illegal goods, in a illegal supply chain, illegally distributed to retail buyers?

Drug dealers don't pay income taxes on the drugs they sell, but they would pay VAT on the food and bling they buy.

20 posted on 06/26/2010 10:48:18 AM PDT by PapaBear3625 (Public healthcare looks like it will work as well as public housing did.)
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To: PapaBear3625

Won’t people just more buy more stuff in other countries that don’t have the high VAT?


21 posted on 06/26/2010 10:49:56 AM PDT by dfwgator
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To: GeronL

Yep, all the unemployed wouldn’t have any pollution to deal with at all. A perfect utopia. People just sitting around sucking clean air waiting for their government checks to clear the bank someday. ;-)


22 posted on 06/26/2010 10:53:56 AM PDT by craigster_nc
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To: PapaBear3625
"Drug dealers don't pay income taxes on the drugs they sell, but they would pay VAT on the food and bling they buy. "

Are merchants allowed to write-off their sales of products to drug-dealers? Of course not. So, the government is already capturing a revenue stream from those transactions by way of income tax paid by the merchants, are they not?

Perhaps one could make a meritorious argument about a national sales tax in lieu of an income tax with respect to capturing revenue from illicit activities. But, a VAT is a tax that is levied in addition to an income tax. As such, I believe the negative effects of such a tax on the larger economy far outweigh the benefits of such a tax with respect to the "black market", IMHO.

23 posted on 06/26/2010 10:59:09 AM PDT by OldDeckHand
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To: GeronL

http://www.freerepublic.com/focus/f-news/2542211/posts
Romania pension cut ruled illegal
BBC News ^ | June 25, 2010

Posted on Saturday, June 26, 2010 11:15:09 AM by Cheap_Hessian

A top court in Romania has ruled out a pension cut demanded by the country’s government as part of a deficit-cutting financial austerity measure.


24 posted on 06/26/2010 11:25:54 AM PDT by NormsRevenge (Semper Fi ... Godspeed .. Monthly Donor Onboard)
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To: NormsRevenge

They should chop off 15% of the government employees to save money then.


25 posted on 06/26/2010 11:29:41 AM PDT by GeronL (Just say NO to conservativecave.com, it rots your teeth!)
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To: NormsRevenge

5%.......that’s a BIG ouchie !


26 posted on 06/26/2010 12:41:10 PM PDT by onona (dbada)
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To: NormsRevenge

Bulgarian, Ukrainian and Moldovan smugglers thank the government heartily.


27 posted on 06/26/2010 12:56:29 PM PDT by tcrlaf (Obama White House=Tammany Hall on the National Mall)
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To: NormsRevenge

Bulgarian, Ukrainian and Moldovan smugglers thank the government heartily.


28 posted on 06/26/2010 12:56:34 PM PDT by tcrlaf (Obama White House=Tammany Hall on the National Mall)
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To: NormsRevenge

...coming soon to a foolish nation near you!


29 posted on 06/26/2010 1:26:48 PM PDT by The Duke
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To: RC2
Yes, this is the fatal flaw in VAT. It has no ceiling except what the traffic will bear.
30 posted on 06/26/2010 6:24:47 PM PDT by hinckley buzzard
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