Prime Minister Victor Ponta announced on Tuesday in the Government meeting that since June 1, VAT will be reduced to 9% for all food products and all soft drinks.
"I want to present to you, to your colleagues and the public opinion, how we stand after the first quarter of 2015 in terms of budget execution. Last year we had revenues of 48 billion lei, the budget approved by Parliament amounted to 50, the collections amounted to 55 . For the three months, please notice, without having any tax increases, quite the contrary, if we look at the CAS. There is an additional 5 billion lei, for the same period. Now the VAT reduction is 9%. It is a sustainable measure. We have the money. The cost is 5 billion lei, we have this money already after the first quarter, so it's not an adventure. It's very clear that we can afford at the moment this measure. "
The prime minister added that the measure is manageable and that any trader has to gain from this measure.
"Because this applies to all foods, it becomes easy to manage the tax. In this way we know that everything which is agri-food throughout the chain, has got a VAT reduced to 9%. It is a share that any trader can pay without having to go bankrupt or be uncompetitive. At the same time, all Romanian products can become more competitive. Both those with organic products and those with traditional products. All those who need support are granted the support by the reduced VAT. "
The Government also maintained its intention to lower the standard VAT rate down to 20% from January.
"We also support the general reduction of VAT to 20% from January 1, 2016, along with other measures provided by the Tax Codes," Ponta said.