President blames Parliament, Constitutional Court for VAT hike

The Head of State admitted yesterday, in an interview for the public radio station, that the VAT hike was a mistake, pointing out that the measure will not solve Romania's problems, with the solution to those problems consisting of taxing all incomes, lowering the huge salaries that some public sector employees have and cancelling social assistance handed out undeservedly. "I am not a supporter of VAT hike. In my opinion it was a mistake not to focus on the source of the budget's cancer. We have some cancerous areas. The extremely high percentage that expenditures on public sector salaries represent and the extremely high percentage of budget revenues we use for social programs," Basescu stated.

At the same time he proposed a 16 per cent tax on all incomes, a level similar to that of the flat tax. "I don't believe there should be tax-exempt incomes. I hope that starting next year the Government will no longer come up with a measure such as hiking the VAT without introducing a tax on any income, including on pensions," the President said. He pointed out that he took upon himself the fallout of the pension cut announcement, however the situation is not as dramatic as it seems, arguing that "according to official statistics dating from 2007, poverty among pensioners stands at 15 per cent, while poverty among young people stands at 37 per cent" and moreover there are 800,000 persons that receive the minimum pension despite never having contributed to the social security fund.

Nine O'Clock