In the midst of a crumbling economy, the new Government has put forward the budget plan, 38 days after it took office: tax-deductible reinvested profit, increase of CAS, increase of state workers’ wage, and pensions - are only few of the measures included in Boc’s budget toolbox, which is intended to be efficient in the fight against crisis.
State workers’ wages hike 5%

Prime Minister Emil Boc said the budget plan had been passed in the yesterday’s session of the Executive, adding that they would handle new round of talks with the trade unions early next week, and if the plan would be modified, the project would be reviewed in another session of the Government.

Boc said the state workers’ wages and the pensions would increase by 5% in 2009, as much as the inflation rate, and the growth process would take place in two phases: in April and October.

The prime minister said the state workers would not receive this year bonuses or overtime payment.

The revenues from national resources accounts for 31.63% of GDP, pre-accession funds accounts for 0.79%, post-accession funds – 0.88%, to which is added a budget deficit of 2% of GDP, minister of finances, Gheorghe Pogea said at the end of yesterday’s session.

“All these funds total 35.3% of GDP, namely 51.16 billion euros”, he said.

Of the 51.16 billion euros, nearly 10 billion (7% of GDP) will be spent on investments. As for the compulsory expenses (social care, pensions, contributions to EU budget), Romania will have to pay 18.7 million euros. “The other expenses remaining for administration will amount to 22.4 billion”, he said.

CAS-raised by 3.3 percent

Premiums to social insurances will be increased by 3.3%, in order to scale back to early 2008 level, said the minister of finances, NewsIn informs.

The decision comes amid a 604 million lei deficit in the social state insurance budget, in November against a surplus registered a month earlier.

This year, the instability is likely to deepen even more, as Citi analysts forecast, seeing the pension budget deficit at 2% of GDP in 2009.

The Government has operated several cutbacks in premium for social insurances paid by employees and employers throughout the recent years, in an attempt to reduce salary costs and to discourage black-market for labor.

As for the raise of taxes charged for premium products, he said they will be specified in the new Fiscal Code.

The reinvested profit will not be taxed as of 2010

Gheorghe Pogea said the measure regarding the deduction of reinvested profit, which would be introduced in the new Fiscal Code, would take effect as of 2010.

He also said that the Government would rewrite the Fiscal Code, in a more simplified version until March 31, 2009.

Teachers’ wages, raised according to performance

Minister of education, Ecaterina Andronescu announced that the education’s budget for 2009 would account to 6% of GDP, including own revenues, mentioning that the teachers’ wages would be raised based on performance criteria.

The trade unions expect the further meetings with the Government, for more details on the pay rise.
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