fbpx Modifica setari cookieuri

SIMILAR ARTICLES

Eurostat data: Romania managed poorly good times but performed well when came to the end of its rope

Romania had in the second quarter of 2020 the fourth-lowest increase in public debt relative to GDP among the EU Member States compared to the… Mai mult

Government attacked the Mobility Package at the CJEU, arguing that European legislation affects Romanian companies

The Romanian Government notified, on Friday, the Court of Justice of the European Union (CJEU) with three actions in the annulment of the problematic Mobility… Mai mult

Finance Ministry announces payment incentives for budget obligations outstanding after the state of emergency announcement

The Ministry of Public Finance (MFP) proposes to regulate a simplified alternative procedure for granting a payment rescheduling of up to 12 months, for the… Mai mult

IMF improved its forecast for Romania: 4.8% decrease in 2020 and 4.6 % increase next year

Romania’s economy will contract by 4.8% of GDP this year, according to the revised forecast of the International Monetary Fund (IMF), a slightly more optimistic… Mai mult

Romania’s recovery – in WB Report: 2021 indicators compared to starting moment of Covid crisis

The data included in the autumn report of the World Bank “COVID-19 and Human Capital” which brings the forecast for Europe and Central Asia countries… Mai mult

Budget revenue, historical minimum – below two-thirds of EU average as a share of GDP. Declining trend and low values ​​across the board

de Marin Pana , 10.12.2018

Romania ranked penultimate among EU member states in 2017 in terms of budget revenues share of GDP, according to Eurostat data.

With only 25.8%, our country had a share above only Ireland (23.5%), but in the context that Ireland’s GDP is expanded by statements of some multinationals that have moved their headquarters there in the anticipation of Brexit).

Bulgaria (29.5%), Lithuania (29.8%) and Latvia (31.4%) are present at a far distance above us, although also at relatively low levels compared to the European practice. For reference, we mention that neighbours France (48.4%) and Belgium (47.3%), followed by the Scandinavian group Denmark (46.5%), Sweden (44.9%) and Finland 43.4%), are at the other end.

More importantly, though, while we are pursuing a convergence process and the accession to the Eurozone, we should note that Romania was in terms of the budget revenue share of GDP at just 64% of the EU average and 62% of the Eurozone average. And our evolution compared to the previous year was the second most negative as percentage points after Hungary, while European averages registered increases, in other words, we are totally going the wrong way.

Even the Hungarians, who have lowered their budget revenues compared to the GDP from 39.3% in 2016 to 38.4% in 2017, have a percentage higher by almost 50% (!!) compared to us, which have decreased from 26.5% to just 25.8% in the same time frame.

In fact, if we relate the decline to the starting base, we have “succeeded” a more pronounced decline than theirs (2.6% vs. 2.3% of the baseline). For Hungarians, we can call it adjustment, in our case, rather recklessness, given the needs of the budget and the commitments already made to increase salaries and social benefits.

More careful with the developments in the Union and with the synchronization of budget trends, in contrast to Hungary and Romania, other states in the former eastern bloc have taken care to increase their revenue collection by more than half a point, like the case of Bulgaria, Poland and the Czech Republic. That’s also because it is the only rational way to bring the budget deficit to the recommended level of -1% of GDP. Which was reached last year as a European average and which we met in 2015 after the tax easing hit us and we headed toward -3% of GDP.

*

  • Total tax revenues and total contributions (% of GDP)
  • Year
  • EU average
  • Eurozone
  • Romania
  • RO/EZ

*

If we refer to the EU accession year, the crisis year 2012 (when the tax cut was claimed by the economy re-launching) and the last three years analysed by Eurostat, data show quite clearly a decrease in convergence with the Eurozone toward which we move.

Or, without proper resources, including for the implementation of projects that we need to co-finance, even though we receive EU non-reimbursable funds, we cannot build a real approximation in terms of living standards reflected in health, education or infrastructure beyond the simple statistical reference to GDP per capita.

If we want to find solutions to reach a level of funding closer to the commitments made by the state, by revenue segments, the situation is as follows:

*

  • Structure of public revenue by main categories (2017, % of GDP)
  • Year    Prod.   (VAT)              Revenue, wealth         Individual         Companies      Social contributions
  • EU average
  • Eurozone
  • Romania
  • RO/EZ
  • Source: Eurostat, own calculation

*

Therefore, the closest point to European practice is VAT (where we could go up to 100% if we improved the collection at least at a similar level to Bulgaria). Social contributions are below the overall average and should be increased, but it will be very difficult from a socio-political perspective to reverse the trend triggered by electoral reasons.

However, the biggest challenge will be (although it seems inevitable for taxes to increase per person and/or household, as they have reached an unacceptable level on long-term of 38% of the Eurozone average, namely half the same relative burden applied on companies, respectively 74%). Hence the average of only 48%, with which we cannot normally present ourselves at the entrance of the single currency area.

Of course, it will be argued that other newer EU members and those in the vicinity of the West have also lowered their taxes on income and wealth. Only that in their vast majority and at comparable economic dimensions, they did not make that so drastically as us (Romania reached 6.1%, compared to 7.3% in Poland, 7.4% in Hungary and 7.7% in the Czech Republic).

In addition, almost all these countries have offset by their taxes above the European average and the Eurozone on the production and VAT side (Romania 10.3%, below the EZ average of 13.2%, while Poland 14%, Bulgaria 15.1% and Hungary 18.2% in production and imports, of which Romania 6.2%, below the EZ average of 6.9% in VAT, where Hungary (9.5%), Bulgaria (9.0% ), Poland (7.8%) and the Czech Republic (7.7%) excel, not to mention Croatia (13.2%).

The idea is that some arrangements can be imagined to obtain a level of acceptance from citizens, but these adjustments cannot be made in the same direction, and especially with our amplitudes, across the entire range of budget revenues.

Sooner or later, someone will have to take their courage in both hands and explain that an average score for the admission cannot be obtained with small scores, below the European average across the board.

Mergeți în homepage ›

Publicat la data de 10.12.2018

Lăsați un comentariu


NEWS

New Renault boss: “Dacia is a miracle. It's time for the brand to flourish"

Luca de Meo (foto), the new general manager (CEO) of Renault group, considers that Dacia project proved to be a miracle and that no one… Mai mult

Pentagon transforms Campia Turzii unit into a NATO air hub at the Black Sea

A former Soviet airbase in central Romania could become a hub for US Air Force operations in south-eastern Europe, where the Pentagon is seeking to… Mai mult

Nuclearelectrica shareholders approved to terminate negotiations with Chinese for building reactors 3 and 4 from Cernavoda

Nuclearelectrica's Board of Directors has been mandated to initiate proceedings to terminate negotiations with China General Nuclear Power Group (CGN), as well as legal effects… Mai mult

Renault holds expansion of its plant in Romania, 15,000 jobs cancelled at global level

"Putting capacity growth projects planned in Morocco and Romania on hold" - is one of the measures included in the draft plan of Renault Group… Mai mult

Romania is a net importer of electricity in 2020 as well

Romania imported an amount of electricity of almost 796 GWh in the first month of this year, by more than 36% above what it exported… Mai mult

Shareholders of Galati steel plant promise investments of one billion euros

GFG Alliance has committed to invest one billion euros to upgrade Galati steel plant in order to reduce emissions and increase production. Another EUR 1… Mai mult

Transport Ministry announces it has sent to Brussels the financing request for Sibiu - Pitesti highway

The Transport Ministry, as the Intermediate Body in Transport, approved the financing request for the project "Construction of Sibiu - Pitesti highway", Sections 1, 4… Mai mult

Romania and Juncker Plan: EUR 720 million attracted, of which 35% by Transgaz for BRUA

(The map of investment financed through Juncker Plan, by GDP share. Darker colours mean higher shares) The operator of national natural gas pipelines, Transgaz (TGN)… Mai mult

Top 3 reasons why young people leave Romania

Lack of trust in authorities, corruption and low living standards are the main reasons why young people leave Romania. The data is part of a… Mai mult

IMM Invest Romania – program implementing rules have been published

The Ministry of Public Finance announces that it has issued the methodological norms for the implementation of the Program for supporting small and medium-sized enterprises… Mai mult

Pollution import and car park expansion: comparisons with the other EU states

Romania is the EU country with the fewest cars in terms of the number of inhabitants, according to data recently published by Eurostat. We appear… Mai mult

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government. News… Mai mult

Laura Codruta Kovesi remains alone in the race for European Chief Prosecutor

French Prosecutor Jean-Francois Bohnert will be appointed as head of the European Financial Prosecutor's Office, a position for which he was heard on Thursday, 11… Mai mult

Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult