Senate passes bill on the CAS reduction. Basescu’s re-examination request, rejected

The bill regarding the decrease by 5 percent of the social insurance contribution paid by employers was passed again by the Senate by 96 votes to one, with two abstentions. As Traian Basescu’s request for reviewing it was rejected, the related law was adopted without any amendments.

Before the senators’ vote, the Budget Committee had unanimously rejected the solicitation to re-examine the bill, adopting a report for approving this draft law.

Given the polemics related to this tax matter, Ioana-Maria Petrescu, the Minister of Finance, stated that she was bothered that “a very good fiscal measure, which encourages business and development, became a political controversy”, re-assuring that Romania has the financial resources to support the decrease of the CAS.

On August 25, senators convened in an extraordinary session for the evaluation of the request submitted a month ago by President Traian Basescu. The bill should have been reviewed on August 18, but the Permanent Bureau decided to postpone talks by one week.

The decrease by 5 percent of the CAS should have been introduced in June 2014, but the measure was deferred until October, Prime Minister Victor Ponta announcing that it will come into force although the foreign partners, the IMF and the EU Commission have not approved the fiscal measure. Provided the CAS will be reduced, the Ministry of Finance anticipates a deficit of some 850 million lei for the final quarter of the year which will be covered by the existing surplus. However, President Traian Basescu declared that under the current circumstances, the measure is not feasible and will increase the budget deficit, so on July 25 he sent the related bill to the Parliament for re-examination.