Romania's president promises cuts in taxes

BusinessWeek ^ | 06/20/2005 | AP

[Panerai]

President Traian Basescu promised Monday his administration would slash payroll taxes next year and pass legislation to reduce bureaucratic procedures.

The measures are meant to improve the performance of the Romanian economy as the country gears up for membership in the European Union in 2007.

"I am convinced that there is no other solution for Romania than a healthy business environment that will stimulate Romanian and foreign investment," Basescu told a Romanian-French business forum in Bucharest.

Romania already enacted a radical tax reform on Jan. 1 by introducing a flat tax of 16 percent that replaced income taxes, which ranged from 18 to 40 percent. But social security, unemployment and health insurance taxes remain at some of the highest levels in Europe, taking about 50 percent of salaries.

"Before we have a welfare state in Romania, our country must first become an economically performing Romania," Basescu said.

[jla]

by introducing a flat tax of 16 percent that replaced income taxes, which ranged from 18 to 40 percent. But social security, unemployment and health insurance taxes remain at some of the highest levels in Europe, taking about 50 percent of salaries.

The latter would tend to negate the benefits of the former.