Increasing pensions - common goal for government partners - 14.11.2023

• The budgetary impact of the pension increase: 25 billion lei in 2024 and 33 billion lei in 2025 • Nicolae Ciucă claims that an important part of this impact could be covered from the 45 billion lei that would result from combating VAT evasion

Increasing pensions is a main objective of the governing coalition, Prime Minister Marcel Ciolacu said yesterday at the Summit of Local Public Authorities in Romania, an event that took place in Bucharest.

Marcel Ciolacu said: "I saw that there is a heated discussion on the pension law, whether or not it is sustainable this year, next year, in the years to come. Ladies and gentlemen, I didn't catch any grandparents alive and now I don't have any parents alive. If you think that we must continue with an average pension for the month of October, I repeat, average, of 1980 lei, I inform you that it is no longer possible. It is inhumane. We have the lowest poverty line in Europe. That's not possible! Really, we have to find sustainability, we have to come up with a tax reform in the coming years, predictable, in 2025-2026, fair. We have to come up with reforms both at the central and local level".

For his part, the president of the PNL, Nicolae Ciucă, showed that it is necessary to increase pensions, but the source of income to cover said increase must also be identified. Nicolae Ciucă showed that only from combating evasion, the state budget could reach 45 billion lei from VAT collection.

The President of the PNL said, at the press statements given yesterday at the party's headquarters: "We support this draft law on pensions and we must strive to find the sources of funding. The main source of financing can be combating VAT evasion, which is 45 billion lei. We will do everything possible to continue the measures implemented in this regard, and now we are also talking about this digitalization process and not only that, because it is about the operation of the entire system in ANAF at the central and local level to be able to monitor, identify risks and take action accordingly. Digitization is always discussed; if that's the main issue, let's get on with it. I took all the steps, including taking a decision in this regard to the Supreme Council of Defense of the Country. Digitization must be done, because the provision of financial resources is a national security issue".

Asked if there is a risk of introducing new taxes and fees next year, given the lack of money for pensions, Nicolae Ciucă stated: "We cannot afford to increase taxes and fees next year. It is already a decision in implementation, a large part of the measures will enter into force from January 1, 2024. As such, we cannot come with another burden on the business environment".

We note that the head of the PNL recently stated that the budget impact for the increase in pensions is 25 billion lei in 2024 and 33 billion lei in 2025. Of the 25 billion lei for next year, 10 billion lei are needed from January 1, 2024, and the remaining 15 billion lei from September 1, 2024.

• The pension law, urgently debated in Parliament

The pension law is on today's agenda of the Senate plenary, to be debated and voted on, according to the decision taken yesterday by the political majority in the Permanent Bureau of this House of Parliament. The program approved by the Permanent Bureau stipulates that the draft law initiated by the Ciolacu government will be debated this morning in the specialized commissions, and at 5:00 p.m. it will be voted on in the Senate plenary. After adoption, it will be submitted to the Chamber of Deputies for debates and the final vote.

The law initiated by the Minister of Labor, Simona Bucura Oprescu (PSD), provides for a 40% increase in the budget for pensions, an increase that analysts said was unsustainable, especially since Romania is already in the budget deficit procedure.

Tanczos Barna, former Minister of the Environment and Quaestor of the Senate, said that "it is unacceptable that such an important law passes the upper house of Parliament so quickly, it is unacceptable that such a law is not debated enough".

Radu Mihail, the leader of the USR group in the Senate, said: "It is an offense the way Marcel Ciolacu and the PSD-PNL government chose to solve the problem of the pension system in Romania. This is not a law that you can ship overnight, thinking that Parliament is just a voting machine. Ciolacu started to have the reflexes of a small dictator who forces laws through Parliament, gives money from the government's reserve fund as he likes and as dictated by his electoral interests and those of the PSD. It is shocking to see how the PNL sat neatly on the PSD trailer and no longer exists. Ciucă turned this party into a platoon that takes the position of the righteous and executes everyone that Ciolacu asks, every time".

The PNL spokesperson, Ionuţ Stroe, had declared on Monday morning that "there will be no changes to the pension law". He said that there can only be small changes in legislative technique, which will not affect the fund.

Prime Minister Marcel Ciolacu promoted the pension law on Thursday, and in the government meeting last Friday, the project was adopted. PNL leaders argued that the law is unsustainable, but Finance Minister Marcel Boloş approved the project.