Prime minister Marcel Ciolacu announced on June 27 that the option of cutting the VAT rate for basic food products, an idea floated in recent days, is not viable.

Finance minister Marcel Bolos made such a proposal, besides arguing for completely eliminating the tax breaks given to selected categories of employees (IT, construction, agriculture, food processing).

PM Ciolacu argued that every such VAT rate cut in the past failed to result in the desired outcome. He insisted, in turn, on the scheme aimed at capping the markups charged by food processors and retailers.

"There is a recommendation of the European Commission to have only two VAT thresholds. I have seen very often in the public space talking about VAT 0%. I am officially announcing that this cannot be done. The EC does not accept any such option for any product. From past experience, because we always have to look to see what has been done, any reduction in VAT has brought about a decrease in a very short period of time. Of course, it brought less collection to the state, so it didn't work," PM Ciolacu said, according to Digi24.

iulian@romania-insider.com

(Photo source: Inquam Photos/George Calin)