Tuesday, July 13, 2010

Romanian government plans to raise income taxes, scrap 16 percent flat tax

BUCHAREST, Romania (AP) - Romania's finance minister says the cash-strapped government plans to scrap the 16 percent flat tax and introduce higher income taxes starting next year, according to a financial newspaper.

Sebastian Vladescu says in an interview published in Ziarul Financiar on Tuesday the government can't raise enough revenue from the current income tax, which was introduced in 2005.

Romania is in a deep recession with its economy due to contract by at least 1 percent this year. The economy shrunk by 7.1 percent in 2009.

In 2009, Romania negotiated a euro20 billion ($25.16 billion) loan with the IMF, the European Union and the World Bank.

All public sector wages were reduced by 25 percent starting July 1, while the sales tax was hiked from 19 percent to 24 percent.

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