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ROMANIA-ENERGY-BANKING-TAX
Romania adopts ‘greed tax’ despite investor concerns
BUCHAREST, Dec 22, 2018 (BSS/AFP) – Romania’s left-wing government on
Friday issued a controversial emergency ordinance imposing new taxes on banks
and energy companies, despite an outcry from investors.
The package of taxes and price caps sparked a big sell-off on the Bucharest
stock market on Wednesday, following a government announcement, although the
measures adopted on Friday were less strict than the original proposals.
“We are adopting a new set of measures to increase the well-being of
Romanians, the level of investment and to correct some unfair practices in
the energy and banking sectors”, Prime Minister Viorica Dancila said at a
cabinet meeting on Friday evening which pushed the measures through.
The government has introduced the measures in a bid to keep its budget
deficit below the EU-mandated target of three percent of gross domestic
product (GDP), but businesses complained of a lack of prior consultation.
Romania is one of the fastest-growing economies in the European Union but
moves this year to raise public sector wages and pensions, combined with tax
cuts, have depleted its coffers.
Under the new rules there will be a levy on bank assets if interbank
lending rates exceed two percent, in what the government has dubbed a “tax on
greed”.
Also, energy companies will face a two percent tax on turnover.
Gas and electricity prices will be capped for the next three years for
domestic consumers but only for some industrial consumers, not all as in the
original proposals.
Austrian Chancellor Sebastian Kurz used a visit to Bucharest on Friday to
criticise the plans.
Foreign companies with a presence in Romania, including Austrian oil major
OMV, could be affected by the measures.
“I am not worried about Austrian companies. They could pack up and leave,
so I’m not worried for them, but for Romania’s economy”, Kurz said, adding
the taxes could deter investment and harm growth.
Investors’ groups have also urged the government not to adopt the new
measures, saying they could trigger an “economic crisis”.
BSS/AFP/HR/0910