Posted on 06/26/2010 9:51:04 AM PDT by NormsRevenge
BUCHAREST (AFP) – Romania will raise the VAT tax levied on goods and services to 24 percent from 19 percent to curb the public deficit and obtain a crucial IMF loan disbursement, Prime Minister Emil Boc said on Saturday.
The move comes after a court on Friday blocked the government's plan to cut pensions by 15 percent in 2010, leading the International Monetary Fund to postpone the unlocking of a new tranche that was due on Monday.
"The government has decided to raise the VAT tax by five points", Boc told a press conference.
"Under these conditions, the agreement with the IMF will continue", he said, adding that the IMF board was now expected to meet on Wednesday to give the green light to a new disbursement for the crisis-hit Balkan country.
Romania has previously agreed with the IMF and the European Commission to narrow its public deficit from 7.2 percent of output to 6.8 percent in 2010.
The VAT-tax hike will be implemented from July 1, Boc said. It should ensure between 3.5 to 4 billion-lei extra revenues in 2010 (820 to 940 million euros), Finance minister Sebastian Vladescu told reporters.
(Excerpt) Read more at news.yahoo.com ...
Romanians scuffle with gendarmes in front of the Cotroceni Palace, the Romanian Presidential headquarters, in Bucharest on June 25 during a protest against cuts. Romania will raise the VAT tax to 24 percent from 19 percent in order to curb the public deficit and obtain a crucial IMF loan disbursement, Prime Minister Emil Boc has said. (AFP/Daniel Mihailescu)
And our government wants us to agree to a VAT? No way!
You don’t want to make the Romanians mad.
They did not shoot enough of the communists in 1989.
Communists are like any other malignant tumor - you have to get them all, or you will arrive back at the same problem.
There is plenty of waste to cut at the federal, state and local level. Before they cut pensions, they need to cut PBS funding by 100%, along with ALL funding to any local community organizations. Let them compete locally for tax dollars.
It will be interesting to see how this plays out.
I wonder what kind of underground economy they have in Romania?
http://www.actmedia.eu/2010/06/14/top+story/underground+economy+draws+near+50+bln+euros+/27921
A VAT would capture a lot revenue from folks in the black economy; the problem is that much of it would be wasted, as it is now.
If raising the VAT solves the problem, then raise it to 100%. /Kenyan economics
A 24% VAT is horrendous.
How does Europe think it will ever have a thriving economy?
Oh wait, they think truly thriving economies are dangerous. I keep forgetting that.
what court was it? A “European” court? A world court?
“And our government wants us to agree to a VAT? No way!”
This story shows why. The courts (to the degree entitlements are defined as “rights”) and politicians will ensure that actual spending cuts are minimal, notwithstanding all the “waste” in government. After all, one man’s waste is another’s income that won’t be given up without a fierce fight.
So the path of least resistance will always be to keep raising the VAT. It’s less visible than income or payroll taxes and has the additional advantage that you can offload part of the burden onto other countries via their tourists etc.
Fiscal conservatives view steadily rising VATs as a problem, but progressives who have always believed in bigger government, merely view it as the best way to extract the most tax resources with the less squawking.
Well before Obama was elected, Rahm Emanuel’s brother Zeke was shopping around a health reform plan in which the entire health system would be funded by a dedicated VAT. Having a dedicated VAT was to ensure health care didn’t have to “compete” for general fund revenues with other public programs such as defense or criminal justice. Using a VAT rather than dedicated payroll tax made it easier to steadily increase the rate as growth in health care predictably kept outstripping the rate of growth in the economy.
In a lot of these countries, Russia didn’t need the troops to have control.
Plus the fact that the UK & US governments were just about as pentrated as the DDR’s. So why the troops..
How so? Why would a VAT, or any tax, capture revenue from the distribution of illegal goods, in a illegal supply chain, illegally distributed to retail buyers?
It seems to me that one of the primary goals of the black market is to avoid things precisely like VATs.
Nothing like some good old-fashioned “Romanian Term Limits.”
We already have a VAT.
It's called the corporate income tax, and it's the highest in the world.
If you have a VAT that high I would think finished foreign goods would often be cheaper.
So they will be destroying any and all manufacturing
Drug dealers don't pay income taxes on the drugs they sell, but they would pay VAT on the food and bling they buy.
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