Socol: Gov't savings in the first three months permit a reduction of VAT to 20pct

Government's savings in the national budget over the first three months of the year will permit a reduction to 20 per cent, from a current 24 per cent, in the Value-Added Tax (VAT) or a 9-per-cent reduced VAT in the months to come, according to governmental macroeconomic adviser Cristian Socol.

Photo credit: (c) Ilie BUMBAC / AGERPRES PHOTO

According to Socol, the VAT could be cut in the months ahead. "The implementation of the national budget in the first three months of 2015 shows not just that the deficit did not worsen, but that, on the contrary, compared with a projected deficit of RON 6 billion on March 31, 2015, there is a RON 1.5 billion surplus, meaning savings of RON 7.5 billion in the first three months of the year. The savings obtained and advance payments in December 2014 on 2015 arrears and claims allow for full cushioning of the initially negative impact generated by VAT cuts. Moreover, second-round effects will boost the multiplication in the economy of the positive trends, thus confirming the sustainability of this tax relaxation measure," Socol told AGERPRES.

Socol also says the Romanian economy needs the VAT cuts so as to boost the growth potential from 3 percent to 4 per cent by boosting consumption and investment. "At the same time, the VAT cuts will boost new job creation, improve tax collection and decrease tax evasion. Romania has to pass fiscal stimuli to increase consumption and thus balance the domestic-external demand and the structure of sustainable economic growth," he added. AGERPRES