Austrian Chancellor Sebastian Kurz, left, shakes hands with Romanian Premier Viorica Dancila at the Victoria palace in Bucharest, Romania, Friday, Dec. 21, 2018.(AP Photo/Vadim Ghirda)

Austrian leader says tax could deter investment in Romania

December 21, 2018 - 2:56 pm

BUCHAREST, Romania (AP) — Austrian Chancellor Sebastian Kurz on Friday suggested that foreign companies could pull out of Romania after the government unveiled a surprise plan this week to levy extra taxes on banks and energy companies.

Kurz was visiting Romania before it takes over the European Union's rotating presidency on Jan. 1, and his remarks were less encouraging for the Eastern European country as it prepares to handle the six-month EU presidency for the first time.

Kurz said Austrian companies could "take their things and leave," adding that the measures in Romania could lead to job losses and price hikes and could deter investors.

However, hours later, Finance Minister Eugen Teodorovici announced the government had passed an emergency ordinance to remedy a fiscal shortfall that risked exceeding the EU's limit of 3 percent of GDP. The measures included taxes on banks, energy and telecommunication companies and a cap on natural gas prices.

Teodorovici said the measures aimed to "increase Romanians' prosperity, increase investment and correct incorrect practices in the banking and energy sectors."

Kurz also directed criticism at Romania's Social Democratic government over its contentious judicial overhaul that opponents say will undermine efforts to fight high-level corruption. His message was embarrassing for Prime Minister Viorica Dancila, 10 days ahead of taking over the presidency from Austria.

Kurz used the one-day visit to stress the importance of the rule of law, saying it was "important when there is a negative development for us to react and try to correct" backsliding.

He praised centrist President Klaus Iohannis for being "a guarantor of these things, he watches them and reacts to correct them. " Iohannis regularly criticizes the government.

Romania's government claims that prosecutors have too much power and Romania should be allowed to decide its own laws.

After Romania's government announced the proposed new tax measures this week, the Romanian stock exchange dipped to a 10-year low. Austria's OMW gas company fell 13 percent on what was dubbed "Black Wednesday."

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