The additional letter of intent with the IMF talks aboutredundancies, monitoring of high income individuals by the taxauthorities, freezing early retirement and including incomes fromcapital gains in the taxation base subject to 16% tax.
Should wage, pension and unemployment benefit cuts turn out to beinsufficient for reaching the new budget deficit target of 6.8% ofGDP, the Government will eventually resort to tax hikes, "asneeded" - this is the commitment taken by the authorities to theIMF in the new letter of intent.
The document signed by Finance Minister Sebastian Vladescu and NBRGovernor Mugur Isarescu, which will be sent to Washington, onlyserves to clearly outline an obvious prospect for the entiremarket: the talk about the tax hike threat was only postponed byPresident Basescu's programme, because the implementation of wageand pension cuts raises a lot of doubts.
Although the cuts should be enforced as of the 1st of June, theGovernment has yet to clarify what legislative steps are necessary.One of the necessary conditions that have to be met before newtranches are released by the IMF is to get a ruling of theConstitutional Court certifying the constitutionality of thenormative acts to be passed.
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