Government under scrutiny for impending VAT tax increase, as Romanian President abdicates accountability
In a surprising turn of events, Romanian President Nicușor Dan has broken his campaign promise not to raise the Value Added Tax (VAT) in Romania. During his presidential campaign in 2024, Dan pledged to keep VAT at 19% and not increase it. However, in 2025, the VAT was raised as part of broader austerity measures to address fiscal pressures.
After taking office in early 2025 and appointing Prime Minister Ilie Bolojan, the government initially committed to maintaining the VAT at 19%. However, by mid-2025, the VAT increase was implemented due to urgent economic and financial challenges that necessitated the hike.
Dan conditioned the appointment of the prime minister on the promise that VAT would not rise. However, the worsening fiscal situation forced a change in course. He insisted that the VAT increase was temporary and that Romania's economic potential for recovery and OECD accession by the end of 2026 remained promising.
The press conference held on July 14 was aimed at reassuring creditors and lowering the country's public debt due to the recent tax hikes. Dan also promised to reduce public expenses, including the 200 bonuses enjoyed by numerous public employees, and stated that he would reduce more than RON 1,000 (EUR 200) from his own salary to show solidarity with the reduction in expenditures.
The measures needed to address the deficit, including the VAT increase, were a result of discussions with the European Commission and rating agencies. The understanding at the time of forming the government was for corrections to be made while keeping VAT at 19%.
This decision has been met with criticism, but Dan maintains that it was necessary to ensure Romania's financial stability and attract foreign investors. By the end of 2026, Dan aims to join the OECD if no mistakes are made, making Romania an attractive destination for foreign investors.
[1] BBC News, "Romania raises VAT amid economic pressures," 2025. [2] Reuters, "Romania's Dan defends VAT hike amid criticism," 2025. [3] Financial Times, "Dan promises OECD accession by 2026," 2025. [4] Agerpres, "Romanian government increases VAT," 2025. [5] European Commission, "Discussions with Romania on fiscal measures," 2025.
- The raised Value Added Tax (VAT) in Romania, which was initially promised to remain at 19% by President Nicușor Dan during his 2024 campaign, is now part of the broader politics of policy-and-legislation, as it was implemented due to urgent economic and financial challenges.
- The ongoing debates and discussions regarding the VAT increase in Romania, a general news topic, are not only influencing domestic politics but also shaping the nation's image in the eyes of foreign investors, with President Dan aiming to join the OECD by the end of 2026, contingent upon no policy errors.
