February 26, 2019 / 7:29 AM / 6 months ago

Romanian government officials defend banks tax, other levies

BUCHAREST (Reuters) - Romanian government officials continued to defend a raft of new taxes introduced through an emergency decree in December despite wider criticism and falling asset prices, promising to reduce loan rates by the end of the year.

The government was also discussing the implementation of the decree with the industries affected by the taxes, but had yet to decide on any changes, according to officials.

“We are currently involved in separate debates with each sector but I want to be very clear ... we will promote alternatives to the decree only if they will be fair for citizens and correct for the Romanian economy,” Finance Minister Eugen Teodorovici told lawmakers on Monday evening.

He also called the decree “the bravest, most daring legislative act” since Romania overthrew communism in 1989.

The decree, approved without an impact assessment or public debate, introduced turnover taxes for energy and telecoms firms, capped gas and electricity prices and raised capital requirements for mandatory private pension fund managers.

It also introduced a tax on banks’ financial assets, tied to money market rates, which the central bank has said interferes with monetary policy.

The finance ministry and the central bank are currently working on finding an alternative to the bank tax.

“By the end of the year, the government aims to lower rates in Romanians’ loans by half,” the prime minister’s economic adviser, Darius Valcov, told state television TVR late on Monday.

Valcov, a former finance minister who authored many of the Social Democrats’ populist measures, was sentenced to eight years in prison in 2018 for influence peddling and money laundering. The verdict is not final, pending his appeal.

Earlier this year, he accused the central bank of not being patriotic enough.

The decree, which has been criticised by employers and unions alike, as well as the European Central bank and international lending institutions such as the European Bank for Reconstruction and Development, has driven the Romanian currency and stocks to multi-year lows earlier this year.

Reporting by Luiza Ilie; Editing by Gopakumar Warrier

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