Second government plan to counter the crisis

 

The only thing remaining in the Finance Ministry draft from the old anti-crisis plan by the former Government is tax exemptions for reinvested profit, aimed at increasing competitiveness. Furthermore, among the 23 steps to counter the crisis, the new plan includes the maintaining of the 16 percent flat tax. For this plan, the new Government decided to establish working groups to include employers and trade unions, who are expected to propose their conclusions by January 17. “Measures proposed by the current government, especially those concerning unblocking lending, could help the business environment escape paralysis, but only if these are applied as soon as possible,” the President of the Association of Businesspeople in Romania (AOAR), Florin Pogonaru, said.

However, the Managing Partner of Tax House consulting company, Angela Rosca, said that the tax exemption is indeed a facility to revive investments, but that this will not end the deadlock brought about by the financial crisis, as companies lack funds for investments, and most of them will not post profits.

Other consultants criticized the ministry for cutting some measures included in the former plan. “Eliminating the 5 percent fiscal prize [tax reduction] for the timely payment of taxes will disadvantage companies that need such a measure during this crisis,” according to the Managing Partner of Mazars advisory company, Gabriel Sincu.

Furthermore, the plan was conveyed to Romania’s National Bank (BNR) Governor, Mugur Isarescu, as measures include the lowering of the key rate by one percentage point, and that of the refinancing rate by two percentage points. BNR still needs to make a decision about these steps. “Such measures are a prerogative of the BNR Board. The government can make proposals, and these are carefully analyzed. There is a Board meeting on Thursday. It is possible that these proposals will be discussed,” the Advisor of BNR Governor, Adrian Vasilescu, told Business Standard. Furthermore, the government is asking for a gradual lowering of the CRR, based on loan growth. “Given that this is a time of crisis, it is natural that various options are considered,” Vasilescu added. The financial crisis significantly affected the Romanian economy and further damage is expected. The real estate sector is in a deadlock, increasingly fewer companies are expecting profits, and there will be much temporarily suspended production or laid off employees. In December alone, the number of unemployed rose by 26,000 people.