Loading ...The current economic situation in Romania makes higher taxation unavoidable, irrespective the colour of the future government because the macro-economic balance must be re-established, pointed out on November 17 RZB Chief economist Ionut Dumitru.
“The main issues Romanian economy is confronted with are the unbalanced foreign debt which cannot be financed and the salaries. We must proceed to an adjustment at the macro-economic level in the economic productivity and salaries fields, an unpopular measure. A cleavage appeared between salaries and productivity and the balance cannot be re-established otherwise than by inflationary corrections or taxation adjustment”, said Ionut Dumitru.
He sees as unavoidable an increase in taxes and customs in the 2 years to come.
“I think that, currently, this is a solution for Romania and I think higher taxation is unavoidable, irrespective of the government or the politicians”, underscored Ionut Dumitru.
Florian Libocor, BRD Chief economist says that, in case it is wished, the tax collection level can be improved.
He cited statistics from 2006, revealing that the black market in Romania accounted for 45% of the GDP (25% of the GDP in official statistics released by INS).
“I think that, currently, this is a solution for Romania and I think higher taxation is unavoidable, irrespective of the government or the politicians”, underscored Ionut Dumitru.
Florian Libocor, BRD Chief economist says that, in case it is wished, the tax collection level can be improved.
He cited statistics from 2006, revealing that the black market in Romania accounted for 45% of the GDP (25% of the GDP in official statistics released by INS).
“Enlargement of the taxation base was badly understood in Romania and applied according to the “hit the hardest working horse” principle. I think that, following some taxes and customs hikes the economy will not react by frauds. And here I give banks as an example, which contributed to bringing up to the surface of a significant part of the underground economy in the case of loan contracting”, explained Libocor.
Romania, which last year had the lowest taxation level in the European Union, of 16%, was outperformed this year by Bulgaria, which currently has a flat tax of 10% and by the Czech Republic, where a 15% tax was recently introduced, according to KPMG.
The flat tax of 16% represented a big success in the re-launching of Romania’s economic growth, not only because it conferred a stronger buying power to its citizens, but also because it was less costly for the companies to hire top managers. Romania has a very competitive taxation as for the companies’ profits, as well, which contributed to attracting investments.
Nonetheless, according to a KPMG study, competition in the taxation field is increasing, especially between countries in the same region and, consequently, the governments must stay permanently in touch with evolutions in the neighbouring countries. Within the EU, this is even more important as the Single market allows individuals and companies to activate outside national borders.
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