“We have vouchers worth tens of billions of lei, all kinds of vouchers, all kinds of banknotes. Hold on, the private sector is tightening its belts, but shouldn’t the state also tighten a little? Do you need all those vouchers, all the bonuses? Let’s see,” said Tenase Stamule, a PNL member and ASE professor who is involved in the PSD-PNL coalition’s discussions on cutting public spending and raising taxes.

In an interview with HotNews.ro, he talked about fiscal and budget measures that are on the table for discussion, what position PNL takes and what PSD wants.

Where could government spending be cut?

“First of all, we are talking about the reduction and efficiency of public spending. Today we see waste in all spheres, from the regionalization of some deconcentrated ones, to the assessment of a number of bonuses provided to the state and other things that we do not consider correct from a social point of view,” he says. Tenase Stamule.

Once we address those things, he says, so will the conversation about raising taxes, because “a hole this big can’t be covered by spending cuts alone.”

• “You can’t put your hand in people’s pockets and say: I will pay for the hole they made me. I put a bullet in my leg, and now it’s all your fault!”

• “The burden must be shared. First, we look at the state that we have a bunch of agencies, idiots, who do nothing. We have to assess whether we’re still creating new agencies if we want to raise taxes.”

“We have vouchers worth tens of billions of lei, a whole curtain of vouchers, all kinds of bills. Hold on, the private sector is tightening its belts, but shouldn’t the state also tighten a little? Do you need all those vouchers, all the bonuses? Let’s see,” he said.

• “If salaries in the private sector increased by 5%, then let’s see how much they increased in the state. Were the increases masked by bonuses or increased food rations?

• “Let’s see why this thing was so disguised. I understand that some people wanted to be friends with certain parts of the social system, but it is unfair to pay the whole society, to lose economic competitiveness just because the budget is built incorrectly.”

Many have a sick leave, but they have nothing

“The other day I spoke with the mayor, who says that he has many people with disability certificates, but they have no problems. They also take companions. These public expenditures should be scrutinized and where they are based on lies, those responsible should be held accountable,” said the ASE professor.

• “We can’t just hit the business environment in the liver… for free. Rather, we reduce government spending, and then negotiate with the business environment.”

What measures are being discussed to raise taxes: from cleaning up micro-enterprises to transfer pricing

According to Stamoule, PSD and PNL must have the wisdom to share this burden fairly.

“There are dozens of measures, from ways to limit transfer prices (there are companies that move their profits, 20 billion lei are taken outside the country), to ways by which people who have only one client are not employed and remain in micro-enterprises “, – he said.

According to him, the concept of micro-enterprise was created in order to start an economic activity that will create added value for you, not for a person not to pay health and pension contributions.

“If you, as a micro-enterprise, have 4-5-6 clients, that’s normal. This means that you have an economic activity. If you have only one client, it means that this company prefers to enter into a service contract with you rather than a work contract,” he added.

• “Many workers disguise themselves as micro-enterprises. If it is eliminated, then it is necessary to somehow stimulate it (there is no reduction in the workload). You can say that not from 2024, but from 2025, but you need to give perspective.”

Another discussion in the Coalition is the liquidation of construction, agriculture and food industry facilities.

“There is another discussion. If benefits are to be abolished, it is right to abolish social contributions in order to reduce the workload. Can’t we this year? Let’s start from next year or 2 years from now,” he said.

• “When you reduce the tax burden and cancel certain benefits, you also have to offer the private economy the prospect of increased fiscal competitiveness.”

According to him, before coming to entrepreneurs and the population with tax increases, the whole package should be discussed.

Certain fiscal instruments, says Stamule, have reached maturity.

“It is correct that they should be liquidated, but they cannot be liquidated immediately. Talk to the industry: in 2-3 years we will gradually grow and the fiscal mechanism will disappear,” said Tenase Stamule.

• “We have 25% of workers in Romania who are special, meaning they don’t pay certain taxes, from income tax to CASS. You cannot criticize special pensions when you are a special employee. From my point of view, there should be nothing special in any category.”

Also on the list of measures is an increase in the tax on dividends from 8% to 10%.

PSD prefers to increase taxes because it supports a fat state

“PSD would prefer only higher taxes because they support a fatter state. Both sides must make concessions on one side or the other,” he said.

• “There is a discussion about the vice zone. And here we have to be very careful with the elasticity of supply and demand, because even if we increase taxes in certain areas, we will end up with huge smuggling at the border. I don’t think it’s sustainable.”

“We must understand that we can no longer be a tax haven with 5% VAT. 9% VAT is applicable for all goods. I do not support the increase from 5 to 19%, as it was in the press. I don’t think there will be such an increase,” the PNL member said.

• “I don’t believe in this approach when we come with a big package. All must be united. And the state must reduce its expenses, automatically and the private sector.”

We cannot destroy the economic environment because some people have budgeted incorrectly

“We have to be economically smart, both we and our colleagues from the government, and understand that this year and next year we cannot come to measures that would have a big budget impact, because there is no more money. why We should ask Mr. Kachiu (former Finance Minister No. Maybe he will explain what he did, where is the money. So when you put some stories in the budget and hope for a miracle… that is not how a country’s budget is done,” Stamule said.

Today, he says, we found ourselves in a situation where we realized that there is no miracle and we need to take money to close the hole.

• “Otherwise, we have a country rating coming in September, and if it puts us in the trash, it will cost us several billion euros in interest.”

• “We cannot destroy the economic environment because some people made the wrong budget. Whoever made a mistake with the budget, let him take up the task of reducing state expenditures. That’s right, and that’s liberal from our point of view.”

Some fiscal and budgetary measures will take effect from September 1, others from January 1, 2024.according to Stamule.

How big was the budget hole in 2023

The budget hole, according to his statements, amounts to 42 billion lei.

Why is he here?

“In the 2023 budget, inflation was much higher, despite the official forecast. Fictitious budget revenues were introduced, namely extraordinary taxes on energy carriers and VAT at the level of last year’s prices, which were not repeated this year. We ended up with a huge hole in the budget,” said Stamule.

According to him, it was not expected that our interest rates will increase. AND

“There we have about 10 billion lei in terms of expenses. Automatically, when your debt increases, your interest also increases,” the PNL member also noted.

A package is being prepared to reduce government spending and increase revenues, he says.

• “We believe that since fictitious money was introduced into the budget, the increase in public spending was based on a lie, and then we need to find a solution to reduce public spending before talking about possible increases in taxes and fees.”
• “Colleagues from the government (PSD) say we should raise taxes and duties.”
• “We have to find a balanced solution between the two measures.”

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