Parliament versus government

Having recently passed the pensions reform bill without meeting the minimum required number of votes, something described by the opposition as illegal, the MPs supporting the government went even farther on Wednesday. By mistake, as they themselves admitted, they passed two bills with which they did not agree and which come into conflict with the government’s austerity policies.

The Liberal Democratic MPs approved, while believing they were actually rejecting, a decrease in the VAT rate for basic products from 24% to 5% and tax exemptions for pensions below 2,000 lei, the equivalent of 460 euros.

The Liberal Democrats’ leader in the Chamber of Deputies, Mircea Toader, puts this mistake down to a lack of communication and justified his colleagues’ error as the result of the large number of bills waiting to be voted on.

Whether mere foolish error or cynical electoral calculation, as suggested by the opposition, which claims the Liberal Democrats knew perfectly well what they were voting on, the passing of the two bills comes at a very bad time.

An International Monetary Fund delegation is in Bucharest to assess the government’s compliance with an economic programme meant to rebalance the budget, a programme established under an ongoing loan agreement.

The Fund also had discussions with the Romanian authorities about the possibility of signing a new agreement, of another type, which would allow Romania to borrow money in emergency situations and maintain the country’s credibility on international financial markets.

Romania’s representative in discussions with the International Monetary Fund, Mihai Tanasescu, said it was too early to measure the impact of the measures taken by mistake on Wednesday.

“If these laws are enforced, they would create an enormous negative impact on the budget, at least in the short run. I’m referring mainly to VAT for food products, which is one of the areas on which the state budget relies the most. Let us not forget that most of the government’s returns at the moment come from VAT, and food products supply the biggest share in this respect. Tax exemptions for pensions below 2,000 lei would also affect most pensions, as 80 to 90% of all pensions amount to less than 2,000 lei", said Mihai Tanasescu.

This means that nothing has been lost, yet, with the exception, perhaps of Parliament’s credibility. The president can now save the situation by refusing to sign the bills in question into law.

(Radio România Internaţional, Serviciul în limba engleză).