Romania's VAT Hike: Will it Boost the Budget or Break the Bank?

Romania Faces VAT Increase: Experts Predict Higher Costs and Tax Evasion Romania is considering a significant increase to its Value Added Tax (VAT) rate. This move, according to fiscal experts, will likely lead to a substantial rise in the cost of living for ordinary Romanians. The increase is expected to affect various goods and services, impacting household budgets across the country. "The increase in VAT will undoubtedly lead to a rise in the cost of living," stated Gabriel Biris, a leading expert in fiscal policy, in an interview with Realitatea Plus. "It's a tax on consumption, ultimately borne by the end consumer." Currently, Romania loses an estimated 9 billion euros annually due to VAT evasion. Biris warns that this figure could easily climb to 10 billion euros with the proposed VAT increase, exacerbating the existing problem. The government's projections on increased revenue from the VAT hike may be overly optimistic, given the high levels of current tax evasion. The impact on the average citizen will be felt through higher prices in supermarkets, increased costs for utilities, and generally reduced purchasing power. The government needs to carefully consider the potential negative consequences of this policy change and implement measures to mitigate the impact on vulnerable populations. The proposed VAT increase remains a topic of intense debate in Romania, with concerns raised about its potential to worsen existing economic inequalities.