Premier Emil Boc and his Finance Minister Sebastian Vladescu admitted on Saturday, during a news conference, something that could not be acknowledged before: there was no solution other than a tax hike, following the decision of the Constitutional Court to not endorse pension cuts.
"The second best solution" as Sebastian Vladescu called the constraint to raise the VAT to 24% left visible marks on the Finance Minister's face: "I can tell you that my proposal was very good (the pension and salary cuts i.e.). I don't like having to go for the 'second best solution'. I made this decision because I had to, not because I wanted to. The agreement with the IMF is essential for Romania."
In a low voice and with a worn out look on his face, Vladescu confessed before the microphones at the Victoria Palace (Government HQ), with a similarly gloomy looking Prime Minister standing next to him, the 'deep disappointment' he felt for having been forced to take such a step: "Beyond the calm approach the Prime Minister talked about in relation to how we must work at this moment, I cannot hide my deep disappointment that today we are raising the VAT. As the Prime Minister said, this measure is one we do not see as the best for Romania at the moment. We had a programme that had us perform surgery, operating where the problem was, where the excess was, operating where Romania's budget had gone astray, and we were not allowed to do that."
Faced with something that had been clear to him for months, Vladescu burst out: "Those who feel sorry for pensioners are ignorant." Ignorant because the VAT hike will translate in inflation and hit everybody, pensioners included. Moreover, it will delay the eagerly awaited economic rebound: "We will have to discuss the new inflation target, the new economic growth target and GDP. All these things will change and will change much more se
