Budget salaries to be frozen and some tax breaks to be scrapped

The Government approved today the so-called "Little Train" Ordinance, on the basis of which the state budget for next year will be drawn up.

The document has three objectives: curbing state spending, reducing budget waste by one percent of GDP, i.e. about 19 billion lei, and increasing budget revenues by implementing the structural reforms of the NRRP.

The "Little Train" ordinance provides for freezing the salaries of budget workers next year at the level of November 2024.

The salaries of dignitaries will also be frozen and parties will receive 25% less than this year.

There will be no more state hiring in 2025 and public agencies and institutions will be abolished and merged.

Holiday vouchers will also be granted with a co-payment from the employee of 800 lei.

Finance Minister Tanczos Barna added that the ordinance also stipulates that people working in construction, agriculture and IT will pay payroll tax.

Tanczos Barna: The facilities for individuals earning income in the fields of agriculture, construction and software creation have been abolished. These people will enter on a standard tax system, according to the Tax Code, as it is done for all other categories of income earners. The amount of 300 lei is also maintained as a non-taxable salary amount that is deducted from the taxable amount before calculating income tax.

The emergency ordinance adopted by the Executive increases the dividend tax from 8 to 10 percent and introduces a new tax on special constructions.

This tax will not be levied for the next 90 days, during which time implementing rules will be drafted and the finance minister will consult with major companies investing in Romania on the tax.

Translated by: Radu Matei