PwC: Government may consider raising VAT by 2% this year

The Government could propose an increase in added value tax rate this year by 1-2% from 19% to address the sagging tax revenues, according to PricewaterhouseCoopers (PwC)."You would be surprised to see the results of a VAT increase by as little as 1%. The Government might consider this action in case it fails to meet the budget deficit targets agreed with the International Monetary Fund", said Peter de Ruiter , Partner, Tax and Legal Services Leader, PricewaterhouseCoopers Romania.

The impact over the budget "would be huge" and tax revenues would increase after only one month in place. But the short-term impact would be negative for the business community, as it would trigger a decline in consumption. On the other hand, Gabriel Biris, managing partner at Biris Goran said that an increase in added value tax rate would not be a workable solution because it would inflate the cost of living."I don't think that raising the VAT is the only solution. I hope the government would focus on tax base rather than burdening taxpayers even more", said Biris.