ECONOMY

Romania improves revenues despite sweeping profit and income tax cuts

BUCHAREST (Reuters) – Romania’s state budget revenues rose 1.9 percent from a year ago by the end of March due to improved collection following sweeping tax cuts introduced on January 1, financial paper Bursa said yesterday. Romania’s centrist government, which came to power last December, wants the International Monetary Fund (IMF) to approve a higher 2005 budget deficit of 0.7 percent of GDP, against an already agreed to 0.4-0.5 percent, so that it can finance various infrastructure projects. The paper said revenues rose 1.9 percent from a year ago to 113.1 trillion lei at the end of March. They were also 2.5 percent higher than the government’s projected figure of 110.2 trillion lei ($3.88 billion). The IMF asked the government, which has introduced a flat 16 percent profit and income tax replacing a 25 percent corporate tax and an 18-40 percent income tax scale, to find ways to finance an estimated $540 million revenue shortfall. Romania, which hopes to join the European Union in 2007, had agreed with the IMF to cut its budget gap from 1.2 percent in 2004.