The additional letter of intent with the IMF talks about redundancies, monitoring of high income individuals by the tax authorities, freezing early retirement and including incomes from capital gains in the taxation base subject to 16% tax.
Should wage, pension and unemployment benefit cuts turn out to be insufficient for reaching the new budget deficit target of 6.8% of GDP, the Government will eventually resort to tax hikes, "as needed" - this is the commitment taken by the authorities to the IMF in the new letter of intent.
The document signed by Finance Minister Sebastian Vladescu and NBR Governor Mugur Isarescu, which will be sent to Washington, only serves to clearly outline an obvious prospect for the entire market: the talk about the tax hike threat was only postponed by President Basescu's programme, because the implementation of wage and pension cuts raises a lot of doubts.
Although the cuts should be enforced as of the 1st of June, the Government has yet to clarify what legislative steps are necessary. One of the necessary conditions that have to be met before new tranches are released by the IMF is to get a ruling of the Constitutional Court certifying the constitutionality of the normative acts to be passed.
The additional letter of intent with the IMF talks about redundancies, monitoring of high income individuals by the tax authorities, freezing early retirement and including incomes from capital gains in the taxation base subject to 16% tax.
Should wage, pension and unemployment benefit cuts turn out to be insufficient for reaching the new budget deficit target of 6.8% of GDP, the Government will eventually resort to tax hikes, "as needed" - this is the commitment taken by the authorities to the IMF in the new letter of intent.
The document signed by Finance Minister Sebastian Vladescu and NBR Governor Mugur I
