Cristian Bica, head of the Romanian Association of Authorized Ford Motors Dealers, said the car price increase determined by the potential VAT hike will directly affect the buyers, most of whom are private individuals.
Nicolae Sorescu, Sales Manager of Romanian car dealership Radacini Motors, said that several car dealerships are already „on the point of kicking the bucket because of the financial crisis”, but that the tax hike will cause the number of bankruptcies to exceed previous forecasts. Sorescu added that Romania should follow the example of neighbors Hungary and Bulgaria and lower tax rates „in order to encourage the maintaining and development of companies on the market.”
Silviu Preoteasa, president of the Romanian Volkswagen Brand Dealers’ Association, said that a tax hike would cause all investments to be called off.
The Romanian Constitutional Court’s Friday ruling, rejecting certain articles of the austerity plan, leaves the Government unable to apply pension cut mesures, as they must return to Parliament to be made to agree with the Constitution.
Romanian Prime Minister Emil Boc said Friday the Government has prepared an alternative package of measures to reduce the budget deficit. These measures will be discussed with the IMF, European Commission and the World Bank. Boc did not say whether this package includes VAT and flat tax hikes.
People close to the matter told MEDIAFAX the Government plans to enact an Emergency Ordinance hiking taxes, which would increase VAT from 19% to 24% or the flat tax from 16% to 20%-22%.
Recession-hit Romania, which is relying on a EUR20 billion international rescue loan led by the International Monetary Fund, has pledged to drastically cut public spending and the Government has adopted laws cutting public sector wages by 25% and pensions by 15%.