The Government’s new tax measures will lead to a RON 5.2 billion (EUR 1.1 billion) drop in budget revenues and will induce major risks in the economy, according to the Fiscal Council.

This estimation doesn’t take into account the compensatory measures the Government plans to implement, but these will not fully compensate the lost revenues, according to the Council.

The fact that private companies are not obliged to increase their employees' gross salaries after the social contribution transfer from employers to employees is very questionable. “It is easy to imagine a situation where, in the absence of an explicit obligation, the employer chooses not to increase the employees’ gross salaries in a sufficient amount to avoid an impact on the net salary level,” according to the Fiscal Council.

Employers should increase the gross wages by at least 20% to compensate for the transfer of social contributions from employers to employees. However, they are not obliged by law to do that.

The Government’s new tax measures haven’t been approved by the Fiscal Council and the Legislative Council.

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editor@romania-insider.com