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Senate: A 5% VAT for basic food products is maintained

The Senate decided on Wednesday to maintain the law regulating the VAT at 5% for basic food products after it rejected the reexamination request formulated by President Basescu.

The request was also rejected by the Budget Committee of the Senate that issued a rejection report, accepted with 53 votes for and 46 votes against. The initiative came from the Social Democrats and Liberals and was adopted by the Chamber of Deputies on October 19, 2010. Among Democratic Liberals who voted for the law were ministers Elena Udrea , Ioan Botis and Gheorghe Ialomitianu. The main article in the law saw a 5% VAT for basic food products like meat, bread, milk, vegetable oil and sugar. After the law was adopted in the Parliament, President Basescu formulated a reexamination request on grounds that a VAT cut will diminish budgetary revenues.

VAT rate change to result in reconsideration of IMF agreement

Parliament has the authority to decide on the change in the VAT on food, but this measure is not included in Romania's agreement with the International Monetary Fund and neither will it automatically result in a price reduction, Romania's representative to the IMF Mihai Tanasescu on Wednesday told Agerpres.

'Fiscal policy stability is the element underpinning Romania's current and future program with the International Monetary Fund. A change in the tax policy was not taken into account. Of course, if Parliament - which is a sovereign body - approves such a change, the data of the program will be discussed anew, depending on concrete developments. Until then, however, we have to wait for the final decision of the Chamber of Deputies, and only after that we will be able to proceed to an assessment, if necessary,' said Mihai Tanasescu.

If a change occurs in the data of the problem, the IMF mission that will come to Bucharest will also have to discuss this legislative change, said Romania's representative to the IMF, adding that: 'We can not interfere with the decisions of Parliament, but if the data of the problem change, if there is a change in the VAT rate, we will of course have to discuss again this aspect of the program with Romania.'

Stressing that Parliament has the authority to adopt whatever legislative change it deems necessary, Tanasascu - a former Minister of Finance - also said that 'a downward change in the VAT on food does not automatically imply the reduction of prices for these products.'

Convened in a plenary meeting, the Senate rejected on Wednesday the request for review President Traian Basescu had sent to Parliament for the law providing a 5 pct VAT rate for staple food.

The Board of the International Monetary Fund (IMF) will analyze in the session scheduled for March 25, 2011 the seventh review of the Stand-By Agreement, as well as Romania's request to conclude a new, precautionary-type agreement with the IMF. During the meeting due on Friday, the IMF executive directors will also discuss the terms of the current Stand-By Agreement's coming to end; this agreement was signed for a two-year period, on May 4, 2009.

Sursa: http://www.actmedia.eu

Tags: change agreement romanias parliament request basic products senate

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