PM slams Vladescu for initiating fiscal reforms

Finance minister announced a set of measures aimed at curbing budget deficit, including the end of flat tax, reducing VAT and introduction of progressive taxation. Vladescu had no green light to announce such measures, an angry premier reacted.

The Boc Cabinet seems unable to agree on the tax issue. Yesterday, the premier said the minister of finance had not had a mandate to lift the flat rate and the progressive tax subject publicly, as it had not been analysed and approved by the Government, and banned minister from putting on the public agenda themes that are not vetted by the Executive. 'I expressly forbid you from introducing into the public debate themes and topics that have not been discussed and approved by the Government,' Boc told his ministers, according to Mediafax.

The Minister of Public Finance, Sebastian Vladescu, had said that, as of January 1, 2011, after six years of flat rate tax, Romania should shift to a progressive income tax system, pension included, while also cutting VAT starting next year. He explained the choice for progressive taxation is supported by all technical assessments suggesting that, given the current state of economy with a recession of over 1.5 per cent in 2010 and reserved outlook for 2011, the 16 per cent tax rate becomes unsustainable and can no longer finance education, healthcare and social security.

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