Romania’s lower chamber of parliament on Tuesday overwhelmingly approved a 5-per-cent cut in the social security tax paid by employers, which the government wants to enforce from October.

The law was adopted with 307 votes “for”, seven “against” and five abstentions.

The tax, known as the CAS, was first approved in June by the centre-left government of Prime Minister Victor Ponta, which says the change will boost jobs and business in general.

Companies currently have to pay the government just over 20 per cent of the gross salary of their employees to fund the social security system.

The cut is controversial, however, as both Romania’s President and the the country’s main lender, the IMF, are opposed, fearing the impact on government revenues.

The IMF, meanwhile, has postponed its review of Romania’s precautionary agreement to the autumn, seeking details about the 2015 budget.

President Traian Basescu in July sent the law back to parliament for re-examination, arguing that the cut in the tax will increase the deficit, amplify the risk of increased taxes on property, and potentially derail the agreement with the IMF.

As the President can resend the law to parliament only once, he is now obliged to sign it off, according to the constitution.

The ruling coalition, which has a working majority in parliament, has offered assurances that the budget deficit will not rise above this year’s target of 2.2 per cent of gross domestic product, GDP.

In 2015, the change to the social security tax will cost the budget 4.8 billion lei, just under 1 per cent of GDP, according to Ponta.

Critics of the Prime Minister say he is pushing ahead with controversial measures, the CAS tax reduction included, to further his chances of winning the Presidential election in autumn. Ponta is the favourite to win the elections, scheduled on November 2.

Last week, the lower house of parliament also decided not to claw back money from pensioners, mothers and some public sector workers who had earlier been overcompensated.