Austrian leader says tax could deter investment in Romania

Austrian Chancellor Sebastian Kurz has warned that Austrian companies could pull out of Romania after the government unveiled a surprise plan 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 East European country as it prepares for the presidency for the first time.

He 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 will be 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 over the overhaul.

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

Finance Minister Eugen Teodorovici on Tuesday presented measures to remedy a fiscal shortfall that risked exceeding the EU's limit of 3 percent of GDP.

The Romanian stock exchange dipped to a 10-year low after taxes on energy, banks and telecommunication companies were announced. Austria's OMW gas company fell by 13 percent on what was dubbed "Black Wednesday."