2017 was the first year when the share of foreign (third states) workers initially established – instead of 3,000 permanent workers, as estimated initially based… Mai mult›
14 brave Franco-Germans relaunch the stake of the moment: six radical proposals for reforming Eurozone. “RON Romania” can meditate on solution
Given that the talks on the Eurozone reform held by the governments of France and Germany seem to get to no result, a possible solution… Mai mult›
Romania loses an important indicator for accession to Eurozone. Explanation for (increased) difference between CPI and HICP
Romania recorded an annual inflation of 2.6% at the end of 2017, according to the data provided by Eurostat for all member states. We are… Mai mult›
After entering the negative range at the mid of 2017, the remuneration of deposits at commercial banks reached a worrying -2.23% per year, according to… Mai mult›
Lost opportunities: Romanian companies have not capitalized on years with low interest rates. Neither did banks. Causes
Romanian companies missed the opportunity window in recent years, of financing at low interest rates. They considered this opportunity only in the second half of… Mai mult›
With what? Romania – for 10 years, last in EU by budget revenues and first to reduce them! Specific problems
de Marin Pana , 18.12.2017
Romania undertook, between 2006 and 2016, the most bizarre policy on public funds of all European countries, according to an analysis released by Eurostat. Starting from the last position in terms of the share of budget revenues in GDP, our country struggled hard last year to reduce them even further.
Only the massive relocation of some multinationals in little Ireland made us lose, under very special statistical circumstances, the position of a European red flashlight to which we would have been fully entitled to due to the utterly irresponsible strategy of permanent tax ease. A strategy based on which we shall ensure not the convergence but the divergence in relation to civilized Europe.
From a minus 10% of GDP in budget revenues from taxes and social contributions compared to the European average just before the EU accession, Romania has reached a disastrous -14% last year, after decreasing the revenue collection by three percentage points in the context of the increase in the overall average by one percentage point (see table).
- Evolution of the share in budget revenues from taxes and social contributions in some EU countries (% GDP, 2006-2016)
On this divergent trend in relation to the practice in the Western states that we want to catch up, the ratio of the money available to the Romanian state for health, education, administration, public order, social protection, etc. and the EU average (considering, of course, the proportion of GDP level) fell from 74% to only 65%.
It may seem a little to some people, but within ten years, the increase in the budget revenues needed for us to start on an equal footing with our counterparts that manage public funds has grown from + 35% (correct is the increase needed in taxes) to a fulminant + 54% in 2016. Make the ratio of 100% to 74% and then to 65% and see what result we obtain.
An important mention. Contrary to the established political clichés, the state, basically, does not takes or gives money, but redistributes it. From productive activity or consumption to the areas of which it is in charge (mentioned above) or from one to the other. If you wish, move some of the decision of money use from your personal pocket to the benefit of all.
A state that redistributes a little is inherently a weak state (not in terms of repression but the possibility to provide social services). Lacking the ability to perform at the level of Western societies to which we theoretically aspire, and do not quite agree when it comes to accurately translating them into practice. As we would translate from English, we should put the money where we put the words.
Specific issues: Possible and feasible solutions in European practice
Beyond the eternal and traditional lamentations about our situation, where we cannot do so much with so little, neither public policies without money, let’s look at others and see what we can do. We chose three countries: Spain (because it is Latin, somewhat similar and the only one besides Romania that is below the European average of revenue collection in all areas), Poland (because it comes from the eastern block and is closest to us in terms of the economy size, structure and level of development) and Germany (chosen as a benchmark for its optimized economic and social performance).
- EU average
- Tax on production
- – of which VAT
- Tax on income and wealth
- – households
- – companies
- Social contributions
If we are to compare the percentages to the European usage, we immediately see the source of problems in public budget financing. Even if we do not agree, we shall have to increase sometime, as soon as possible, taxes on households and social contributions. The dose of them could be of a Polish inspiration and commensurate with the level of the increase in living standards.
The Bulgarian alternative to this Spanish-Polish-German action would be to maintain the taxes mentioned at relatively low values and strongly push the tax on production and VAT (measuring, at the south of the Danube, 114% and 131%, respectively, of the EU average).The fact that the second option does not seem to be for a long run, beyond our national appetite for VAT evasion, is explained by Germany’s positioning, not at all a Bulgarian one, which applied a strategy of reduced taxes on production (with the VAT collected positioned at the EU average) and boosted social contributions above the European average.
As well as the disguise of Poland, in terms of fiscal policy, as a kind of smaller Germany, by keeping the proportions between the level of development and the taxation share compared to the European average. A model to which our Latin cousins from Spain also get close, except for our unwillingness to have taxes applied at the personal level, which can be explained (interesting note: not as much at the household level but on the social contributions side).
Lăsați un comentariu
BNP Paribas, the largest French bank and the second largest in the EU by the size of assets, will launch its retail operations in Romania… Mai mult›
The BNR will impose restrictions on credits to the population, to anticipate potential non-payment risks. This could happen in March if the project is approved… Mai mult›
The European Parliament will run debates on the situation of justice in Romania in the next plenary session, in February, in the Strasbourg plenary. The… Mai mult›
The Government approved in the last meeting a memorandum stating that the state will use its preemption right at Mangalia Shipyard and buy the 51%… Mai mult›
First major acquisition in 2018 - MApN signs contract with General Dynamics to acquire 227 armoured carriers
Minister of National Defence, Mihai Fifor, participates Friday at the signing of the procurement contract for 227 Piranha V armoured carriers, a release of the… Mai mult›
Business environment: Waiving governance rules in state-owned companies, another measure that deepens feeling of distrust
The Foreign Investors Council (FIC) released on Wednesday a statement that expresses its dissatisfaction with the "authorities’ political agenda" containing decisions that "will lead to… Mai mult›
Last week, the Ministry of Economy has launched to a public debate a draft government decision to establish the company Casa de Comert, which, according… Mai mult›
Public Private Partnership: Government has regulated by emergency ordinance the cost cutting through "Value for Money" analysis
The Government has established the new regulations on the public-private partnership (PPP) by an emergency ordinance issued Thursday and introduced the Value for Money concept,… Mai mult›
Catalin Ivan: In Romania, there are 384 companies with bearer shares, all collaborating with the state. More than EUR 40 billion transferred from Romania to offshore companies
MEP Catalin Ivan stated on Friday in Iasi that there are 384 companies with bearer shares in Romania, which gives the owners the comfort of… Mai mult›
Brussels offers Romania four months to take measures to correct significant deviation of structural deficit
The European Council issued on Tuesday a new recommendation, at the request of the European Commission, based on the significant deviation procedure, with Romania being… Mai mult›
In Romania, the ratio between the revenues that must be collected from taxes (including social contributions - tax/GDP ratio) and GDP was 26% in 2016,… Mai mult›
The nine ambassadors who met on Wednesday with Minister Tudorel Toader shared their "concern over the draft laws on the reform of the judiciary discussed… Mai mult›
Vitruvian Partners investment fund acquired about 30% of Bitdefender from Axxess Capital and becomes the second largest shareholder in the company, valued at over USD… Mai mult›
Split VAT at the Chamber of Deputies: Dilemmas of all kinds. Thresholds for outstanding payments have increased 10 times, Budget Committee to resume debates on Monday
The Budget Committee of the Chamber of Deputies has increased ten times the threshold of the outstanding VAT obligations from which companies will automatically be… Mai mult›
The Competition Council started an analysis, following the request of the Ministry of Agriculture, to establish the causes of the accelerated food price increase this… Mai mult›