Kelemen Hunor: I would increase VAT to 21%, keep reduced VAT for food and medicines

Hungarian Democratic Union of Romania (UDMR) Chairman Kelemen Hunor believes that one of the fiscal measures that should be adopted to reduce the budget deficit is increasing the VAT from 19% to 21%, while maintaining the reduced VAT rates for medicines and food.

He responded Monday evening on Digi 24 when asked which of the fiscal measures discussed in the context of forming the new government had been agreed upon - increasing the VAT, progressive taxation, increasing the dividend tax.

'I can tell you what I believe, not what others believe, because we are still in discussions these days. I would keep the flat tax - 10%, 16% on dividends, and 16% on profit - because it might be one of the only... advantages or attractions for investors. Romania's competitiveness in the region lies in this flat tax. On the one hand. On the other hand, we have slowly managed to create a middle class, and that must continue to be strengthened, not harmed, plus in the economic sector we maintain competitiveness. I would increase the VAT by two percentage points, from 19 to 21, and I would accept raising the reduced rate from 9 to 13, 14 - somewhere in the 11 to 15 range - and I would keep the reduced VAT only for food and medicines,' said Kelemen Hunor.

The UDMR leader gave examples of other measures he supports, such as broadening the tax base for health insurance contributions (CASS) and cutting 'extravagant' spending by boards of directors.

'I would broaden the tax base for CASS, because there are a lot of exemptions there. And I would cut all privileges and all extravagant spending by boards of directors, on bonuses and so on, because there are indeed things there that can no longer be sustained. And then I would make a plan for 3, 4, 5 years, because we can't solve this in a single year, not even in 2 years. And yes, we need to start by trimming investments, but at the same time, I need to say where we will invest, because if we cool down the economy, we won't have revenue. You can reduce consumption a bit, maybe inflation will rise a little, but if you also cool the economy, it's over. You enter a recession, and you won't have revenue. If it were up to me, I would take on the reduction of the deficit over the medium term, over 4-5 years, so that the shock doesn't fall on the citizens or the economy,' said Kelemen Hunor.