The Government of Romania has approved a reduction in the social security tax paid by employers, in defiance of the IMF and despite a warning from the country’s President that the move will put the country’s economic stability at risk.
Romania’s Chamber of Deputies voted overwhelmingly in favor of the 5 percentage-point reduction, after President Traian Basescu sent the legislation back to Parliament for a review. The upper house rejected Basescu’s review request last month. The move is expected to create a revenue shortfall of RON850m (USD25m) in the last three months of 2014, and Basescu has predicted that other taxes will have to rise following elections in November.
