Premier Emil Boc and his Finance Minister Sebastian Vladescuadmitted on Saturday, during a news conference, something thatcould not be acknowledged before: there was no solution other thana tax hike, following the decision of the Constitutional Court tonot endorse pension cuts.
"The second best solution" as Sebastian Vladescu called theconstraint to raise the VAT to 24% left visible marks on theFinance Minister's face: "I can tell you that my proposal was verygood (the pension and salary cuts i.e.). I don't like having to gofor the 'second best solution'. I made this decision because I hadto, not because I wanted to. The agreement with the IMF isessential for Romania."
In a low voice and with a worn out look on his face, Vladescuconfessed before the microphones at the Victoria Palace (GovernmentHQ), with a similarly gloomy looking Prime Minister standing nextto him, the 'deep disappointment' he felt for having been forced totake such a step: "Beyond the calm approach the Prime Ministertalked about in relation to how we must work at this moment, Icannot hide my deep disappointment that today we are raising theVAT. As the Prime Minister said, this measure is one we do not seeas the best for Romania at the moment. We had a programme that hadus perform surgery, operating where the problem was, where theexcess was, operating where Romania's budget had gone astray, andwe were not allowed to do that."
Faced with something that had been clear to him for months,Vladescu burst out: "Those who feel sorry for pensioners areignorant." Ignorant because the VAT hike will translate ininflation and hit everybody, pensioners included. Moreover, it willdelay the eagerly awaited economic rebound: "We will have todiscuss the new inflation target, the new economic growth targetand GDP. All these things will change and will change much moreseriously and dramatically than if we had cut salaries andpensions."
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