Weekly Policy and Political Report October 23 - 30
Weeks after the Government reshuffle, Social Democrats still have to publicly deny rumors about tensions and further changes in the structure of the Government. On Wednesday, October 25, PSD’s Liviu Dragnea denied rumors about poor relations with PM Mihai Tudose, while in his turn Tudose denied speculations that he plans to sack Minister of Labor Lia Olguța Vasilescu. Against the backdrop of the ruling coalition's attempts to contain the aftershocks of the Government reshuffle, PM Tudose proposed former PM Sorin Grindeanu for the position of president of the National Telecom Regulator ANCOM. Three days after his visit in Parliament to defend the Split VAT mechanism, FinMin Ionuț Mișa made headlines alongside Minister Lia Olguța Vasilescu at the Government sitting of October 26, as they announced a series of “Measures for stimulating the business environment and reducing the fiscal burden.” The same day, the Ministry of Finances put up for debate on its website a Draft Emergency Ordinance on the transfer of social contributions, taxes on revenus. The Ordinance transposes EU Directive 2016/1164, laying down rules against tax avoidance practices that directly affect the functioning of the internal market. In this regard, the normative act enforces a limit to interest rates' deductibility, exit taxation – in order to prevent base erosions, anti-abuse rules - and it introduces guidelines for Controlled Foreign Companies (CFC). National media was prompt to present these changes as nothing short of a `fiscal revolution.` It is worthwhile observing that these proposals happen at the same time with the drafting of the budget for 2018. The latest deadline presented for the submission of the Budget bill in Parliament was October 31, as PSD’s Liviu Dragnea announced on October 25. However, it is expected that the Bill is sent to the Parliament at a later date. In the context of discussions over the Government's `fiscal revolution`, protests of healthcare employees over their wages continued last week. As other protests may yet spark (transporters), the ruling coalition is in a tight spot, given that it has to ensure funds for pay raises, while keeping the deficit under 3%. The Opposition Save Romania Union (USR) elected Dan Barna new party president. Barna, a specialist in law and structural funds, was part of the Government led by Dacian Cioloș and served as Secretary of State at the Ministry for European Funds. These elections were not acknowledged by all party members, with USR’s former president and founding member Nicușor Dan refusing to acknowledge the validity and legitimacy of these internal elections. Whereas under its former president Nicușor Dan USR was an `umbrella party` that catered to all ideologies, from left wing progressives to liberal conservatives, Dan Barna positioned USR as a center-right wing party. According to Barna, his main goal is to shape the doctrine behind USR, which according to his views should be to the center-right, "the area of pro-European modernizing liberalism, explicitly supporting private initiative and economic development".


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Progress Report on the Priorities of the European Commission, October 18 - 25, 2017
After last week’s Government reshuffle, the ruling coalition met on Wednesday, October 18, to decide which bills would be tabled in Parliament, by means of a parliamentary initiative, and which would be incumbent on the Government, to be adopted by means of governmental procedure. The Justice Laws (a set of legislative amendments meant to alter the procedure for appointing prosecutors, introduce new rules for the Judiciary Inspections, magistrates’ liability and so on), the Public Procurement Laws, and the Sovereign Fund for Development and Investments were also included by PSD Chairman Liviu Dragnea on the list of priorities that the ruling coalition needs to decide how to adopt. At the end of the meeting, ALDE’s Călin Popescu Tăriceanu confirmed that the Justice Laws would be submitted directly to the Parliament.


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Progress Report on Fiscal Policies, October 16 - 23, 2017
On Monday, October 23, while attending the Government Hour in the Chamber of Deputies, FinMin Mișa announced that the split VAT measure will be optional for all economic agents, with the exception of those in insolvency and those who do not comply with VAT-related tax obligations for a longer period of time. Minister Mișa said that these changes are the result of consultations with the business environment. The split VAT measure, as explained by Mișa, aims to remove unfair competition and the advantages some economic agents gain from not paying their due taxes. During the political debate in the Parliament, USR, PNL and UDMR asked for the Split VAT Ordinance to be dropped. UDMR announced that their parliamentary members will vote against the measure. Through the voice of Varujan Vosganian, ALDE announced that they were the ones to oppose the mandatory character of the measure within the ruling coalition, and who proposed that split VAT be optional for all companies, except for those under insolvency or with a bad fiscal history.


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Weekly Policy and Political Report, October 16-23, 2017
After last week’s Government reshuffle, the ruling coalition met on Wednesday, October 17, to decide which bills would be tabled in Parliament, by means of a parliamentary initiative, and which would be incumbent on the Government, to be adopted by means of governmental procedure. The Justice Laws (a set of legislative amendments meant to alter the procedure for appointing prosecutors, introduce new rules for the Judiciary Inspections, magistrates’ liability and so on), the Public Procurement Laws, and the Sovereign Fund for Development and Investments were also included by PSD Chairman Liviu Dragnea on the list of priorities that the ruling coalition needs to decide how to adopt. At the end of the meeting, ALDE’s Călin Popescu Tăriceanu confirmed that the Justice Laws would be submitted directly to Parliament. Apart from the aftershocks of the Government reshuffle, the ruling coalition also faces waves of protests. Healthcare Unions went through the eighth round of negotiations, unsatisfied with the wage increases enforced through the Unitary Wage Law after the transfer of social contributions, and so far it appears that negotiations were inconclusive. Earlier this week FinMin Mișa underlined that Unions’ demands will never be met. Transporters also announced protests for November 3. Against the backdrop of social turmoil, the Government is preparing to unveil the final form of the Social Dialogue Law. On Saturday, October 21, Minister for Public Consultation and Social Dialogue Gabriel Petrea announced that his ministry is getting closer to reaching the final form of the Social Dialogue Law. On Monday, October 23, minister Petrea met with unions and employers for a final round of discussions. After consultations, the bill will go to the Parliament, According to minister Petrea, the law is to come into effect next year.  


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Progress Report on the Priorities of the European Commission, October 11 - 18, 2017
The three ministers proposed by PSD were sworn into office on Tuesday, October 17 evening, one day after PSD submitted their proposals. The Presidential Administration announced on Monday, October 16 that President Klaus Iohannis received Sevil Shhaideh, Rovana Plumb and Răzvan Cuc’s resignations, as well as PSD’s proposal for their replacement: Paul Stănescu for the Ministry for Regional Development, Marius Nica for the Ministry for European Funds, and Felix Stroe for the Ministry of Transports. Neither PSD chairman Liviu  Dragnea (President of the Chamber of Deputies), nor Senate Speaker Călin Popescu Tăriceanu (ALDE) attended the Cotroceni Palace hosted ceremonies. On October 17, following a vote in the plenum, Deputies shielded Rovana Plumb from the investigation in the Belina file by vetoing the immunity lift proposed by DNA. On October 18, Sevil Shhaideh was appointed counselor to the Prime Minister.


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