Romanian Social Democrat Leader Liviu Dragnea Unveils Tax Overhaul Plan

BUCHAREST, Romania, October 11, 2016 /PRNewswire/ --

Liviu Dragnea, leader of the Social Democratic Party of Romania (PSD), has launched ambitious plans to lower taxes and ease fiscal policy. 

Tabling a bill in the Senate to eliminate 102 nuisance taxes and charges, Mr. Dragnea said the plan is part of his party's economic program intended to grow the middle class and put more cash into people's pockets. In recent days Mr. Dragnea has unveiled policies to reduce Romania's flat income tax to 10% from the current 16%, and eliminate it altogether for those earning 2,000 lei (approximately EUR 440) per month. Simplification and reductions in various social taxes are expected to bring them to about 35% from 39%. 

Summing up the plan, Mr. Dragnea remarked, "The PSD wants to bring more and more people out of poverty into the middle class. The reduced taxes and elimination of bureaucracy that we have championed are the catalysts that create higher living standards, and we have put those pro-growth policies at the center of our economic program because we dare to believe in Romania!"

Mr. Dragnea said putting more money into people's pockets was the key to growth and development. "We want to raise the minimum gross salary to 1,750 lei in 2020, increasing the number of persons employed full time to 5.6 million people and implement a gradual increase in the pension to 1.400 lei. These are not only steps to bring people the chance to live a decent life in the middle class. These are measures to accelerate business processes and help growth continue so that we get more money for the budget."

Mr. Dragnea said the costs will be covered by a combination of increased tax revenues arising from economic growth and higher incomes and from revenues paid by the planned new Sovereign Fund for Development and Investment, announced Sept. 22. 

The PSD president anticipates reducing the budget deficit as a percentage of GDP from the current 2.9% to 2.0% in 2020, with total budget revenues rising to 300 billion lei in 2020, up from 231 billion lei in 2016.

The least costly part of the tax program, the elimination of some 102 user charges and other fees, is expected to have a profound impact on the lives of ordinary citizens. 

"These taxes are 0.1 percent of the GDP, but take 30% of our time," Mr. Dragnea said on national TV Sunday. Among the fees and taxes to be eliminated are those for environmental stamps for vehicles, 33 different fees for various consular and citizenship services, radio and TV taxes, 22 different fees for changing or replacing identity documents and a tax payable for the retrieval of a criminal record certificate. Mr. Dragnea said all such "non-fiscal taxes" represent for Romanians having to queue to pay them "lost time and humiliation."

The PSD's tax program launch is part of a series of economic reforms designed to help ordinary Romanians gain direct benefits from economic expansion and grow the middle class. The PSD, the largest party in Romania's parliament, relinquished office last year following street demonstrations in the aftermath of a devastating nightclub fire. Under its new leadership, the party is seeking a new mandate in elections scheduled for Dec. 11. The elections are expected to replace a caretaker "technocratic" government. Mr. Dragnea maintains that the current government's inexperience has resulted in freezing Romanian living standards, which had been rising quickly under the previous PSD government.

About the Social Democratic Party of Romania

⁠⁠⁠The PSD, in Romanian Partidul Social Democrat, was originally formed in 1992 as a party of the center-left and is currently the largest grouping in both lower and upper houses of the nation's parliament, while also controlling more than half of the mayoralties and over 65% of local and county councils, including the capital of Bucharest. The PSD paved the way for Romania's historic accession process into the EU in 2007, and today holds 16 of the country's 32 MEPs. Its 2012-15 government was considered one of Romania's best, leading the country's emergence from the economic crisis and achieving rapid growth, together with a sharp increase of people's living standards. Liviu Dragnea, the PSD's current president, was elected party leader in 2015 and has since led a series of reforms that have positioned the PSD to form Romania's next government. Mr. Dragnea is a former Deputy Prime Minister and Minister for Regional Development.

For further information: Steluta Negoita, +40 730 650 545, presa@psd.ro in Bucharest or Zhenya Harrison, +44 (0)20 3397 2825 or zhenya.harrison@belgravestrategic.com in London.