BUCHAREST, Dec 18 (Reuters) – Romania’s coalition government will raise the monthly gross minimum wage by 6.8% to 4,325 lei ($998) but also cut in half a 1% minimum tax on turnover from January to help ease the burden on companies, it said.
The six-month-old government has raised a series of taxes, frozen public sector wages and pensions and cut some state spending to tackle the largest budget deficit in the European Union and retain Romania’s investment grade rating.
The four parties in the ruling coalition have struggled to agree on the cuts at every step, and the budget plan for 2026 has been delayed until January. The value added tax hike enforced in August has depressed demand in the economy and pushed inflation near double digits.
The government has agreed to cut in half the 1% minimum tax on companies with an annual turnover higher than 50 million euros from January and completely scrap it from 2027.
The finance ministry had planned to scrap it altogether this year but the tax remained at the insistence of the leftist Social Democrats, the largest coalition party and key to maintaining a pro-European majority.
The coalition has also agreed to cut spending in central public administration, subsidies for political parties and lawmakers’ monthly lump sum income by 10% each.
The government aims to bring the budget deficit close to 6% of economic output next year from over 9% in 2024. It has survived six no-confidence votes since July.
($1 = 4.3334 lei)
(Reporting by Luiza Ilie; Editing by Andrew Cawthorne)
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