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Finance minister dismisses opposition’s proposal to reduce VAT as populist and unfounded


https://www.ipn.md/en/finance-minister-dismisses-oppositions-proposal-to-reduce-vat-as-7965_1088750.html

The parliamentary opposition’s initiative to reduce the excise duties and VAT rate on oil products is not viable from economic viewpoint and is aimed at the persons who accept a populist approach, said Minister of Finance Dumitru Budianschi. According to him, the lowering of the excise duties and VAT rate would cause an imbalance between the country’s revenues and expenditure. Parliament will soon debate a bill to amend the state budget and the budget deficit is to be raised by at least 6 billion lei, IPN reports.

The minister does not support the Bloc of Communists and Socialists’ proposal to halve the excise duties on fuels and to annul the VAT on their import. He considers this is a populist initiative that diminishes the state budget revenues.

“If we reduce the excise duties or the VAT rate on oil products, those who afford to pay 30 lei a liter will also benefit from reductions. I’m in favor of targeted support as any reduction of costs implies the reduction of a benefit. If we today reduce any source of income, the expenditure will also decrease. Do they want us to reduce costs for subsidies, salaries? The opposition is the one that says we should reduce taxes and also demands to raise salaries. A balance is not ensured this way. These are unfounded and unfeasible proposals designed for persons who accept a populist approach,” Dumitru Budinaschi stated in a talk show moderated by Ileana Pîrgaru on RliveTV.

The minister said Parliament next month is to discuss amendments to the 2022 state budget. The war in Ukraine seriously affected Moldova’s economy, pushing costs up and reducing revenues. The budget deficit projected at 15 billion lei last year is to be increased by at least 6 billion lei.

“We incurred multiple additional costs. We faced the energy crisis, the refugee crisis and indexed pensions. As a result, the deficit will rise by 6-7 billion lei. Our partners were very receptive. The IMF initiated the revision of the program. We will update the program signed last year. We plan to fully cover this deficit with loans and grants,” noted the minister.

Two days ago, the European Parliament agreed to provide Moldova with €150 million in macro-financial aid to cover a part of the financing gap. The €120 million in loans and €30 million in grants will be paid out in three installments until 2024.