About VAT increase: “We have swallowed increases of over 100%, but we believe that an increase of only 1.7% will go bankrupt”

“The increase of VAT from 19%to 21%, maybe even up to 24%, is the emergency measure that can quickly get us out of the troubles we entered,” writes in an opinion text, Dragoș Damian, CEO of Cluj Therapy and the executive director of the employers of drugs in Romania (Primer).

A simple calculation shows that something that costs 100 lei without VAT and 119 lei with VAT will cost at the new VAT 121 lei, respectively 124 lei, ie an insignificant increase, with about 1.7%, respectively 4.2%;

Increases of 1.7% or 4.2% are nothing. In the last 5 years the summed inflation was almost 40%, according to official data, but the sale prices increased by over 100%, we all felt this. It was blamed on cost increases, but costs are just a fraction of the sale price. If the costs double it does not mean that the prices have to double.

“Specula took full advantage of VAT freezing”

Price increases in Romania in the last 5 years are called speculation. And the speculation took full advantage of VAT freezing. But that doesn't matter now.

Definitely, there will be a price increase after VAT increase, but much lower, for example, than the price increases in the first months of 2025 – the sale prices increased by over 10%, we all felt this again;

Romanians have been bombarded over the last 5 years (they are still bombarded …) with panicard information that VAT increase will lead to the explosion of prices. Congratulations to the communicators, top marketing that exploit the precarious level of financial education. The communicators tell us this: you have swallowed as the suckers price increases of over 100%, but an increase of 1.7%, respectively 4.2%, will take us all in bankruptcy!

An increase planned by VAT, especially under the conditions of appetite for consumption of Romanians and an underground economy, should have been a part of an annual responsible governance program-having the effect of braking prices-and not now, in the 12th hour, a deficiency correction measure.

Money from VAT growth remain with immediate budget effect

To whom the revenues from the price increases of over 100% of the last 5 years have gone and why the state is not able to establish the tax evasion in VAT-we may discuss another time.

The much-trim the growth of the GDP with which Romania praises does not mean anything if it does not bring budgetary revenues for schools, hospitals, seniors, streets, security. In contrast, the money from the increase of VAT has an immediate effect on the budget, in schools, hospitals, seniors, streets, security.

The great risk, given the history, is that the success of the measure will depend on how the state will collect and, above all, use the amounts from VAT increase. If he does not know how to collect them or throw them on the window, then I did nothing.

But the state will be run on Monday, May 26, 2025, by Nicușor Dan, in which 70% of us trust. And because we all want Romania to change in the government of Nicușor Dan, we can probably accept that this government will start with less pleasant news, and the pleasant news will come later.

This text originally appeared on the Plaorma contributors.ro.