REPUBLIKA.CO.ID, BUCHAREST -- Romanian Prime Minister Victor Ponta warned on Wednesday that the authorities can introduce special fees against those breaching competitiveness principle and increasing food prices before the VAT reduction.
Ponta made the remark at the beginning of the weekly cabinet session, in the context that the increase in food prices has been a hot topic of mass media and public opinion.
"Please check if what appeared in the press is true. If hypermarkets, traders, ... are taking advantage of the VAT cut to increase prices now so they can remain with the prices they want afterwards," said Ponta, suggesting to combat such behavior with "legal and customary solutions in the European Union."
The prime minister asked the Agriculture Ministry, the Competition Council and the National Authority for Consumers' Protection to conduct an investigation until next week in order to find if some economic agents are increasing prices before the VAT reduction.
Ponta warned those breaching the competitiveness principle this way that he would not hesitate to take "tough measures" such as introducing special fees.
"We have the means to compel all those who operate on the Romanian market, through very clear and very tough measures," he said, warning that the authorities will introduce fees so high against the traders who will not knock down the prices following VAT cut for food on June 1, so that they should lose all they gain on speculation.
Recently, local media widely reported a wave of price rise in food prices before the VAT cut. Yet, the representatives of big retailers denied the rises in a parliamentary hearing on Tuesday.
The government decided to cut VAT from 24 to 9 percent for all food products, as well as on non-alcoholic beverages and catering services. The measure will come into force from June 1.
The significant drop in VAT on foodstuffs was introduced a year and a half after a decrease in VAT for bread was enforced. It is estimated that the new VAT cut should lead to a drop of about 12 percent in food prices.
Authorities expect the VAT cut will encourage domestic producers to charge competitive prices, reduce tax evasion, encourage consumption and boost economic growth.
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