Romanian MPs lower VAT 'by mistake'

2010-10-20 17:08

Bucharest - Romania's parliament on Tuesday night unanimously voted to cut value-added sales tax (VAT) to 5% on basic food products, a move done "by mistake", according to the governing party.

Our "vote yesterday evening was a mistake," Mircea Toader, leader of the ruling Democrat Liberal Party (PDL), admitted during a press conference, explaining that PDL lawmakers got confused as more than 80 draft laws were put to vote.

Finance minister Gheorghe Ialomitianu himself voted in favour of the VAT cut even though it contradicts his government's stand on the issue, Mediafax news agency reported.

The bill adopted by the lower chamber was initiated by the opposition parties. It proposes to cut VAT from a current 24% to 5% on products like meat, bread, milk or sugar.

But this runs counter an agreement signed by the Romanian centre-right government and the International Monetary Fund (IMF) in order to curb a rising public deficit by raising VAT from 19% to 24%.

"We will make up for this mistake by initiating a draft cancelling yesterday's vote," Toader added.

An IMF mission arrived in Bucharest on Wednesday in order to assess the impact of an austerity package implemented by the government in the face of a severe economic crisis.