‘Tax on greed’

Romania’s left-wing government on Friday issued a controversial emergency ordinance imposing new taxes on banks and energy companies, despite an outcry from investors. The package of taxes and price caps sparked a big sell-off on the Bucharest stock market on Wednesday, following a government announcement, although the measures adopted on Friday were less strict than the original proposals.

“We are adopting a new set of measures to increase the well-being of Romanians, the level of investment and to correct some unfair practices in the energy and banking sectors”, Prime Minister Viorica Dancila said at a cabinet meeting on Friday evening which pushed the measures through.

The government has introduced the measures in a bid to keep its budget deficit below the EU-mandated target of three per cent of gross domestic product (GDP), but businesses complained of a lack of prior consultation. Romania is one of the fastest-growing economies in the European Union but moves this year to raise public sector wages and pensions, combined with tax cuts, have depleted its coffers. Under the new rules, there will be a levy on bank assets if interbank lending rates exceed two per cent, in what the government has dubbed a “tax on greed”. Also, energy companies will face a two per cent tax on turnover.