FIC President: Dissatisfaction in the private sector due to taxation levels


The third edition of the Romanian Business Leader Summit – February 13 and 14 – aims to create a more transparent dialog between the public and private sector.

“The degree of dissatisfaction in the private sector is rooted in increased taxation levels, given that Romania’s economic growth has been satisfactory and the European fund absorption rate has improved,” Mihai Bogza, Foreign Investors Council (FIC) President, stated at the Romanian Business Leader Summit, Hotnews.ro reports. “The absorption of European funds – approx. EUR 100 million per year – may be one of the small success stories of the current administration. The absorption rate has gone from 17 to 47 per cent. EUR 1 billion have been absorbed overall,” Liviu Dragnea, Minister of Regional Development and Public Administration, said in turn at the summit.  Bogza was referring to the new special constructions tax and the yet unimplemented fuel excise tax increase.
“The private sector was also promised taxation levels would be eased, but such measures would have an undoubtedly lesser effect compared to the fiscal burden of the expenses I just mentioned. Nevertheless, this means the public sector is confident it will be able to use resources from the private sector more efficiently in 2014 than it did in 2013. The general impression of the private sector so far has been that we don’t get back as much as we put in by paying taxes,” the FIC president said further.
In addition, Bogza pointed out Romania’s main challenge in 2014 is to improve efficiency in the public sector. On the long term, another challenge would be to adjust the wage grid in the public sector. “My favourite example relates to the very small wages of public workers with high responsibilities, which evidently do not provide any incentive and create the illusion that people who undertake high-responsibility positions work pro-bono. Another example concerns physicians who seem to have no other choice but to emigrate or accept envelopes. The situation is obviously unsustainable on the long term and has stagnated for too long,” Mihai Bogza explained.
On the other hand, the president of CIS welcomed the authorities’ decision to prioritize public investments, while stating he is cautiously waiting for those decisions to be implemented. “We know it is a difficult decision to implement, politically speaking. However, since the private sector is hurting – also indicated by the fact that the largest number of private sector insolvencies was reported in 2013, participating in projects initiated and funded through public money would be like a breath of fresh air for the private sector,” Mihai Bogza emphasized.
Florin Pogonaru, President of the Romanian Businessmen Association (AOAR), also took part in the debates and described the local economy as “a bunker economy” in which imports are processed and redirected to exports, thus resulting in economic growth, but unimproved living standards. “Romania needs to outline a reference economic model applicable to the entire public sector,” Valeriu Nistor, president of AmCham, pointed out in turn.
“The business environment’s main priorities are still Education, Entrepreneurship, and Proper Management, the same three most important courses of action set forth at the first edition of the summit (2012),” Mihai Marcu, president of the Romanian Business Leaders Foundation (FRBL), stated at the start of the plenary session.
The third edition of the summit (February 13 and 14, 2014) focuses on the business leaders and private organizations’ role in creating more effective strategies and a more transparent dialog between the public and private sector.

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