The president of the Fiscal Council, Daniel Dayanu, said that the level of taxation in Romania is one of the lowest in the European Union, clarifying that we have reached this situation because of huge mistakes that happened a few years ago. He also clarified that the reduction of contributions in the conditions of such a large deficit will not solve anything.

On Friday in Prima News, Daniel Dayana was asked about the excessive taxation of high incomes, which is supported by the PSD and is being discussed in the coalition.

“The name can be commented on, because if we talk about retaxation, we can think of something that has only a temporary effect, for example, as additional taxation of energy companies, but this is not the case. I think we are unfortunately not looking at the whole situation. We are talking about the 20 billion lei that were called by the Ministry of Finance some time ago, in the sense of the need to get to cover this deficit that was formed in the execution of the state budget, either through a drastic reduction in spending or through a better collection,” confirmed Dayanu.

He specified that Romania reached the situation of 2019 with a structural budget deficit of 5% of GDP.

“Unfortunately, in 2023 we are in the situation of 2019, that is, with a structural deficit of the budget, which is about 5% of GDP, this is a situation that cannot be preserved. In 2020 we had a pandemic, the deficit was just over 9% of GDP, in 2021 the deficit was down to over 7% of GDP, and last year we had a deficit of just under 6% of GDP, but it benefited from some very, very special conditions , I mean very high inflation and energy income. We have actually returned to a deficit since 2019, the pre-pandemic year, this is a structural deficit as a difference between incomes,” explained the president of the Fiscal Council.

He also stated that the level of taxation in Romania is one of the lowest in the European Union.

“The level of taxation in Romania is one of the lowest in the EU. And we got into this situation not only from a philosophical approach, but simply because there were colossal mistakes in 2015, 2017. Look at the personal income tax cut, for example, personal incomes have gone from 3.5, 3.6% of GDP to 2.4% of GDP. The same thing happened with value added tax. This is a reality that is also illustrated by data from Eurostat, data from the International Monetary Fund and the World Bank, that is, we are talking about numbers,” said Daniel Dayanu.

In his opinion, a reform of public administration is needed. “We need a reform of public administration both at the central and local level, but we have to solve the issue of the budget deficit, because now, if we imagine how some want to reduce taxes and fees, well, we are shooting ourselves in the foot. How to reduce more? I saw a proposal to apply a single quota everywhere, cancel all the benefits, all the benefits that are practiced in some sectors of the economy – IT, agriculture, construction – but reduce the contributions. Well, if we reduce the contributions in the conditions of such a large budget deficit, we have not done anything,” said Dayanu, who clarified that all the proposals that appear in the public space are not accompanied by figures, budgetary impact.