The newly proposed, but not yet sworn in Minister of Finance Ioana Petrescu recently said that the “labor in Romania is too much taxed, rates are too high,” and she supports the reduction of the social security contributions (CAS) by five percentage points from July 1.

“I’ve always agreed with the reduction of CAS by five percentage points. I will support as much as I can the application of this measure from July 1st. […] I am a big supporter of these two measures, the CAS reduction and tax exemption for reinvested profit. The five percentage points cut will have a beneficial effect on companies and will encourage them to hire with documents, meaning legally. We have a very large black labor market and it has to be reduced,” said Petrescu, quoted by local Mediafax.

Also, the tax exemption for reinvested profit will trigger an increase in foreign direct investments, she added.

“We want to stimulate capital formation and investments. The National Prognosis Commission made an analysis and estimated a positive impact of plus 0.5 percentage points to the GDP,” said Ioana Petrescu.

Prime Minister Victor Ponta recently stated that these two measures remain on the agenda of the new Government.

A Government statement from February showed that the “Romanian Government backs the reduction of CAS and the tax exemption for reinvested profit, measures to be discussed in April with international donors delegation, during its visit in Romania.”

More about the current status of the Romanian Government, which passed the Parliament vote, but was not yet sworn in, here.

Irina Popescu, irina.popescu@romania-insider.com