Nazare: we won't touch the tax rate, half of the deficit reduction still lies ahead

Nazare is the only member of the toppled Bolojan government who would also get a place in the Niculescu cabinet, and at Monday's hearing lawmakers specifically pressed him on whether he would stick with the flat-tax system in a government whose ministers were nominated mostly by the Social Democratic Party (PSD). "I have always been a supporter of the flat tax, we are not planning to change it," – said the ministerial candidate, adding that the budget is adopted by parliament, which requires the support of every party, so the views of the parties involved must be heard, but that this does not mean a change regarding the tax rate.

Asked whether anyone could possibly force him to do so, Nazare replied at the hearing that there is no room for coercion when it comes to budgetary balance, that pressure can come from any direction, and that it is not worth pointing fingers. As his own record, he cited that during his tenure the rating agencies confirmed Romania's rating nine times in a row, and that he managed to get two state budgets adopted because he is able to withstand pressure. "But it is not enough to resist pressure, a balance must be found among the parties," he added, calling on every party to maintain balanced conduct going forward.

According to the candidate, the 2027 budget will be the decisive test for the country's risk rating, since Fitch will visit Bucharest in January, Moody's in February, and S&P is expected in March, and all three agencies want to see a credible plan for next year. Nazare recommended that the future government follow the rule that permanent spending should only be planned together with a permanent source of revenue or an equivalent amount of savings, and reminded that the months of October through December will be decisive for keeping the 6.2 percent target set for 2026. He wants to carry out the budget revision still in October, mainly because of healthcare spending and increased interest costs.

At the hearing, Nazare also stated that the minimum tax on turnover (IMCA) will be abolished as of January 1, 2027, something all parties agreed to for the sake of predictability and economic stimulus – and the government program sets this down as well. He said, however, that extending the fuel price cap needs to be reconsidered, since a six-month extension carries a heavy fiscal burden.

The flat tax is a sensitive point in the Niculescu government's program, since the document that the designated prime minister submitted to parliament on October 15 preserves the principle of a single tax rate, even though the PSD, which forms the backbone of the government, has for years consistently demanded a shift to progressive taxation, and party leader Sorin Grindeanu has previously argued in favor of a tiered tax as well. According to a summary by Spotmedia, the program also contains several measures that the Social Democrats fiercely opposed during Ilie Bolojan's premiership, including the stock exchange listing of minority stakes in state-owned companies and the phase-out of the minimum turnover tax. The PSD, however, said on Friday that the submitted program includes every measure it had requested from Niculescu.

Nazare's position is not new: in July 2025, while still finance minister in the Bolojan government, he said that progressive taxation "is not timely," that the current rate has brought the country predictability and investment for twenty years, and that technically, preparing it within the tax authority's system would take at least a year and a half to two years. According to the government program, the deficit must be brought below 3 percent of GDP by 2030, and the share of public-sector personnel spending must be reduced from 9.3 percent in 2024 to 7.9 percent by 2031, while the document ties several commitments explicitly to the availability of fiscal room.

~Ugar