At a time when countries such as Germany are resorting to taxcuts, the authorities in Bucharest are thinking of what taxes theyshould raise next year, ignoring signals from the businesssector.
Mariana Gheorghe, 53, chief executive of Petrom, the biggestcontributor to the state budget, says she does not want any taxraise, especially since many countries are contemplating tax cutsin response to the crisis.
"Raising the profit tax would be a blow. Indeed, maybe companiesthat are not posting profits will remain unaffected by such a step,but the rest are already feeling the pressure on their incomebecause of the crisis, anyway. I believe it would be best if wedidn't see any tax increases. I do not want tax raises. Mostcountries' response to the crisis was to cut taxes," says the CEOof Petrom, a company with 4.5 billion euros in business and 277million euros in net profit in 2008.
Discussion over the tax raise comes at a time when revenues of thestate budget have slumped as a result of the crisis, and theagreement with the IMF requires the authorities in Bucharest tofind ways address the issue. Early this month, President TraianBasescu admitted in a discussion behind closed doors with foreigninvestors that he would rather raise the VAT instead of the flatincome tax, information the Finance minister later verified. On theother hand, promoting such steps, like the VAT raise, would weakenpurchasing power and therefore transfer the costs of the crisis tothe people.
A number of businesspeople have stated that the solution to boostrevenues to the state budget is to cut taxes and that increasingthem is not in the best interest of the business sector.
The head of the biggest company in Romania says that the currentpolitical crisis only serves to make the challenges the domesticeconomy is facing tougher.
"We are now living the Romanian version of a democratic politicalcrisis. We will have many challenges to respond to over the comingperiod and this political crisis only serves to make things worse.The answer the government was supposed to give was postponed andthe lack of response only serves to make this crisis worse." In theopinion of Mariana Gheorghe, even a new government will need a timeto familiarise itself with the job, which will delay the responseto the crisis even more.
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