Romania Leader Says No Tax Hikes in 2006

BUCHAREST, Romania (AP) -- Prime Minister Calin Popescu Tariceanu said Monday that his government won't raise the value-added tax next year and will reduce payroll taxes.

The government has been considering raising the VAT tax from the current level of 19 percent to 22 percent to reduce rapidly rising demand which threatens to increase inflation.

Tariceanu said that after discussing the matter with his Liberal Party, "we concluded that there is no need to raise the VAT tax." He added that the flat income tax for individuals and corporations would also remain unchanged at 16 percent.

"We want to respect our promises on reducing the payroll taxes," Tariceanu said in a news conference with his Finance Minister Sebastian Vladescu.

Vladescu said the size of the payroll tax cuts would be decided later, and vowed to work toward a balance budget for 2006.

"We will try to keep the macroeconomic balance, and avoid international criticism for unsustainable expenses," he said.

Romania's economy is expected to grow by over 5 percent this year. The country wants to cut inflation from 9.3 percent last year to about 7.5 percent.

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