Romania has a very large structural deficit, possibly the largest in the European Union, which some estimates place at 6%, stated, on Friday, the chairman of the Fiscal Council, Daniel Daianu, at the launch event of „The Tax Institute”, the first think-tank dedicated to taxation, write Agerpres.
„This deficit is much more than 3%, and 3% is a target for us. In fact, we should go, if we want to enter the euro zone, if we want to have the fiscal space to absorb external shocks, from the wars to the pandemic and crises, we must have a budget balance defined by a small deficit and higher tax revenues, which is not understood.
Some still philosophize that this deficit or low tax revenues are a constraint, an embodiment of the social contract. Mr. President of the Senate was talking about a car that does not catch. The car is caught. The car lives on gas bought, received from others, on debt. We will not be able to continue with such deficits. We do not have time, even if we could find some tolerance at the European Commission. And what else can I say, and I say it without diplomacy: this correction cannot be achieved through miracles. Miracles do not exist in the economy,” explained Daniel Daianu.
He added that this macroeconomic correction must be carried out even if it means „dissatisfaction, frustration, anger”, stressing that Romania has gone through very difficult, costly moments for society, citizens and the business environment.
In his opinion, those who claim that a correction can be made only on the part of state expenses „feed a chimera”, that is why they must „also get to incomes”, respectively to the elimination of inequities in the tax system.
Also, the chairman of the Fiscal Council considers that Romania has the power not to enter into a cessation of payments, but only „with great suffering”.
Regarding expenses, the chairman of the Fiscal Council emphasizes that Romania can „cut a lot”, but it must also analyze these expenses, „carry out spending reviews, as they are called at the OECD”. Currently, these are done regarding Education and Health, but they should also be done regarding the functioning of the Romanian state.
Regarding the National Recovery and Resilience Plan, the chairman of the FC mentioned that it comes with absolutely necessary reforms, but it also comes with the „quality of people”, stating at the same time that you have a good architecture for nothing if unskilled people are put „at the helm”.
Related to the low level of tax collection, Daianu mentioned that National Agency for Tax Administration continues to work on risk analysis and maintains discretion, although it should work on mechanisms that depersonalize the relationship between payers and tax employees. He added that Bulgaria reached a collection rate of 31% of GDP, while in Hungary, Poland and the Czech Republic it was 35% – 36%.
Last but not least, Daianu expressed his surprise at the reduction of European funds destined for Romania, stating that the European executive did not judge correctly in this situation.
