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January 27, 2023
BUSINESS

Taxes could be reanalysed when Gov’t tax revenue collection is 37-38pct of the GDP

Tax on special structures as well as other rates and taxes could be reanalysed when the Romanian Government’s tax revenue collection reaches between 37 -38 per cent of the Gross Domestic Product (GDP), up from a current 32-33 per cent, Economy Minister Constantin Nita told a taxation conference on Wednesday.
‘When the tax revenue collection rate of the Romanian Government reaches 37- 38 per cent of the GDP, then we could reanalyse all these rates and taxes. Unfortunately, the rate is only 32-33 per cent now. When we reach such collection rate nobody in this country will levy taxes when he or she wants. But right now the country needs hospitals, schools and the army. Of course we have to see what to do about tax collection,’ Nita explained.
In his turn, Deloitte Romania Fiscal and Juridical Partner Coordinator Dan Badin said Romania will be able to reach the level mentioned by the minister only when tax evasion, currently estimated at 16 per cent of the GDP, is halved.
‘Tax collection is 32-33 per cent of the GDP, and a report of the Fiscal Board last month indicated that tax evasion is some 16 per cent of the GDP. If we add up the two figures we reach a collection potential of 47-48 per cent, which would be one of Europe’s highest. If just half of the tax evasion is stopped and tax collected, we would reach the 37-38 per cent of GDP level without any problems. So I believe we could get there without having to hike taxes in Romania. Romania’s tax system will this way become friendlier. We can get in the end to cutting taxes, increasing public pay, improving infrastructure and less public debt, Badin explained.
Nitu agreed that business people need a predictable business environment, especially because there is a perception that taxes will go on increasing.
‘There is such a perception because over the last years no Tax Code has remained untouched, so there is that picture now that anyone coming should levy one more tax, which is not true. I am for a stable Tax Code that can be predictable over a longer term. So far as I know, work is being done on a new Tax Code, but a gentleman’s agreement is needed among political parties not to change it,’ said Nita.
Asked about the tax he would cut to boost economic growth, Nita answered the Value Added Tax (VAT). ‘The VAT is a very important element. We should take measures in time to cut the VAT; a 19-20 per cent VAT would be enough and bring a plus to the economy. Its effects will certainly be beneficial,’ said Nit.

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