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Cronicile

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

de Victor Bratu , 5.8.2019

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government.

News agencies published, on Wednesday night, a series of information – provided “on sources” from Victoria Palace – about a start of the reform of central administration system, the introduction of taxes on soft drinks and the increase of excise duties on cigarettes, the elimination of some bonuses and taxation of pensions that are not based on taxation.

All decisions, which would be approved in the Government before the budget amendment, most likely on Monday, are taken into account, as the Government has to source almost RON 7 billion in order to maintain the budget deficit below 3%.

The Ministry of Finance has been given assurance for months that the budget has enough money to meet all obligations, even for public investments, but has cut, for example, allocations to local administrations.

Bad news for “special” pensioners

Special pensions will have a system of gradual taxation, between 10 and 50%, for different amounts, according to a bill prepared by the Government, official sources quoted by Mediafax said.

Pensions below RON 2,000 are not taxed, those between RON 2,000 and 7,000 will have a 10% tax, between RON 7,000 and 10,000 the tax will be 30%, and for special pensions that exceed RON 10,000 lei, the tax will be 50%.

The tax will be applied only to special pensions, not to those obtained from contributions, sources said. The measure would affect about 4,000 people who have special pensions above RON 7,000.

Jobs cut, blocked and no bonuses for harmful conditions

The government is preparing to reduce the number of jobs in the central public system, with a reduction by half in the number of state secretaries and personnel scheme of state secretaries’ offices remained in the system, official sources said, quoted by Mediafax.

The 50% reduction in the number of state secretaries will not affect institutions with only one secretary of state, but those with many positions of secretary of state would lose even more than half of the number of secretaries of state.

On the other hand, vacancies in the public sector will be blocked, except for institutions in health, education and police sectors, according to Agerpres.

The Government also intends to regulate the number of management positions in the central public administration system. Currently, the number of management positions is limited for civil servants, where management positions can be 12% of the total number of employees. The regulation applied to civil servants is to be extended to the rest of the central administration, with the exception of a few areas such as education, health or the police.

The measure targets some departments led by chiefs, but with a very small number of subordinates.

Also, another project aimed at increasing the efficiency of budgetary resources targets the elimination of the 15% bonus for difficult and harmful conditions.

The elimination of the 15% bonus for difficult and harmful conditions was decided on the grounds that authorities found that there were institutions where employees received this bonus only because the air in Bucharest, for example, is polluted.

The measure will not affect doctors, teachers, police employees or magistrates, but government officials say the bonus will be a fixed amount for them and not the current 15% level.

The measure will be discussed with unions in the next period, writes Mediafax and Agerpres.

New excise on soft drinks, higher excise for cigarettes

The Government will discuss at the beginning of next week a draft legislation which includes, among other things, the introduction of a tax on sugar from soft drinks, government sources said.

The tax would be introduced as of September and would increase the price of one litre of soft drink by about 1 RON. The measure is part of a package of measures that also provides for the increase of tobacco excise duties.

Tax on soft drinks is the initiative of the Ministry of Health and is supported by the Ministry of Finance, with the explanation that similar taxes are also applied in other EU countries: the UK, Denmark, Finland or Ireland.

Drinks with sugar content between 5 and 8 grams per 100 millilitres will have an excise duty of 0.8 lei per litre.

Drinks with a content of over 8 grams per 100 millilitres will be taxed by 1 RON per litre.

The excise duty will be payable by producers, importers or those who make intra-Community purchases, but most likely will be reflected in the shelf price.

Authorities estimate the average annual consumption of soft drinks with high sugar content at around 80 litres per capita.

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