Romania’s President Traian Basescu on Thursday, September 18, signed the law which reduces social security contributions (CAS) paid by local companies for their employees by 5 percentage points.

Basescu said that he thinks the measure is good but not sustainable, and this is why he first rejected it and sent it back to the parliament to be reanalysed. The Parliament, however, made no change to the law and the President had no other choice but to sign it.

President Basescu also said that the Government probably won’t have any problems covering for this measure this year, but that next year the state’s pension fund deficit will increase, as social contributions will be lower. The Government will probably be forced to increase other taxes or reverse this social security tax cut after the presidential elections this year, to cover for the state budget deficit next year.

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editor@romania-insider.com