Romanian government mulls cutting social security contributions.

By bne IntelliNews March 6, 2012
The Romanian government is considering the option of cutting social security contributions by 3-5pps, PM Mihai Razvan Ungureanu was quoted as saying by daily Ziarul Financiar. The reduction would be operated on the side of the employees' contributions, but possibly also on the employers' side, he said. Yet, the final decision depends on the budget execution and on the government's commitment to observe fiscal deficit limitations, Ungureanu said. Furthermore, the labour taxation loosening will depend on the external risks. We recall that former PM Emil Boc also mentioned last autumn the option of lowering the social security contributions but as the economic outlook worsened he toned down these plans earlier this year prior to filing his resignation in February. Cutting the social security contributions might be risky, but it is also the most recommendable policy aimed at stimulating growth since labour taxation is excessive, news agency Mediafax quoted in October Romanian central bank governor Mugur Isarescu as telling a conference. Back then, he warned that cutting the contributions to the public pension system should be paralleled with structural reforms aimed at increasing the employment and with functional private pension systems.

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