Romanian Cities Face Budget Cuts as Government Shifts Tax Revenue
The Romanian government’s recent decision to alter how income tax is collected is sparking outrage from local officials, who fear significant budget reductions. The change, announced by Finance Minister Alexandru Nazare, impacts the distribution of revenue from income declared through the annual single statement (declarația unică). Specifically, for 2026, these funds will be directed entirely to the state budget, rather than being partially allocated to local municipalities.
The city of Galați is among the first to publicly voice concerns. Mayor Ionuț Pucheanu estimates the change could reduce the city’s income by approximately 20 million lei annually. He directly accused Prime Minister Ilie Bolojan of imposing the changes, stating, “After you forced me to raise local taxes and fees, to make a fool of myself in front of the people of Galați and to be the most hated man in town, you are making another reform. You come at night like thieves and take 20 million lei from the city’s budget.”
“How can I explain to the people of Galați that there is no longer money to repair streets or finish operate on schools and hospitals, after they have paid higher taxes?” – Ionuț Pucheanu, Mayor of Galați
A Nationwide Problem
Galați isn’t alone in its concerns. The mayor of Craiova, Lia Olguța Vasilescu, has also criticized the government, claiming her city could lose over 50 million lei due to the same fiscal changes. Both mayors argue the decision was made without consulting local authorities.
What Income is Affected?
The changes specifically target income reported through the single statement, which includes earnings from independent activities – such as those of doctors, lawyers, notaries, and architects – as well as income from rentals, copyrights, and self-employment. Previously, a portion of this revenue flowed to local budgets. For Galați, this amounted to roughly 20 million lei per year.
Potential for Reversal
The situation isn’t yet final. Authorities indicate the project can still be modified in Parliament, and mayors are attempting to persuade legislators to alter the revenue distribution formula. The government’s decision has sparked a debate about the balance of power and funding between central and local administrations in Romania.
FAQ: Frequently Asked Questions
- What is the declarația unică? It’s the annual single statement used in Romania to declare various types of income.
- How much money could Galați lose? Mayor Pucheanu estimates a potential loss of 20 million lei annually.
- Is this change permanent? Not yet. The project can still be modified by Parliament.
- Which cities are affected? Galați and Craiova have publicly voiced concerns, but the change impacts all Romanian municipalities.
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