Romanian PM hits back at criticism of tax hike

Romania can not be an "El Dorado for everyone," a country with the lowest taxes in Europe, stressed Prime Minister Victor Ponta on Monday amid complains of the Foreign Investors Council (FIC) on the government's new tax hike measures. According to the FIC, the measures announced recently by the government, including introduction of a tax on special constructions, correlated with the increase in excise duties on fuel and in the royalties for mineral resources other than oil and gas, will have a major impact on certain economic sectors directly involved in production. "Is there a tax that does not exist in Europe or America? " the prime minister asked rhetorically, stressing "that's all over Europe." "We have the lowest taxation, with the exception of Bulgaria," he added. "We have a responsibility toward the citizens of this country, what can I do? To cut their pensions, wages, further close hospitals..." said Ponta, explaining that all these measures were primarily negotiated with the European Commission (EC) and the International Monetary Fund (IMF) with which the country has a fresh two-year precautionary stand-by agreement. "I guess that the FIC and the American Chamber of Commerce (AmCham) in Romania were those who said it's good to have an agreement with the EC and the IMF. So one cannot do with it, and without it, at the same time," the head of government told a press conference here. Earlier, Ponta stated on Friday, in reply to the fact that AmCham believed the new fiscal measures generate an unprecedented worsening of the fiscal burden, that taxes in Romania are currently smaller than those in the United States and in European countries. "I care a lot and I am greatly interested for the business environment to have a competitive environment in Romania. On the other hand, I am elected by Romanians. And I have to do my duty towards Romanians first and foremost," Ponta said. The introduction of a special tax on constructions such as sidewalks, traffic signs, ditches, pillars for mobile phone, radio and TV antennas will affect not only the direct payer in the energy sector, telecommunications, utilities, transport and infrastructure, but it will be reflected indirectly by the price, with consequences upon the final consumer, claimed the FIC. AmCham believed that measures such as raising the price of fuels or taxes on special constructions will be reflected in the rise of production costs and implicitly of the price of Romanian products, thus lowering their competitiveness on external markets. FIC is one of the most important associations of foreign investors in Romania, bringing together over 130 multinational companies whose cumulative investments represent almost two thirds of all direct foreign investment in Romania since 1990. AmCham, in its turn, brings together 350 American, international and local companies with total investments of over 10 billion U.S. dollars and 200,000 jobs.