During the presentation of the budget, another source of additional revenue is added: improving the efficiency of the collection. In practice, this means nothing, it is only an excuse to increase costs, which become unreasonable.

This was also noticed in the Fiscal Council, including regarding the budget for 2022.

The institution says that it is impractical to include some additional revenues, the source of which is to increase the efficiency of the collection, in the construction of the budget.

“An expected quantification of the possible revenues from efforts to increase the collection of fees and taxes is not possible because there is no performance history to support such calculations,” the 2022 report said.

In addition, an analysis of budget performance in recent years shows that collection efficiency targets set in initial budgets or during budget adjustments have never been met.

Thus, the additional revenue from the improved levy can actually be included in the budget, but only after their amount can be estimated with a high degree of certainty and there are sufficient signs of the emergence of a tendency to reduce tax evasion, which would amount to a permanent nature of these incomes.

We don’t collect as much VAT as we should / Bulgaria outperforms us

According to the cited source, compared to similar economies in Central and Eastern Europe (CEE), it can be estimated that Romania has an unsatisfactory level of VAT collection in relation to GDP – indeed, the level of the weighted average VAT rate is lower than ECE.

As in previous years, in 2022, in terms of VAT revenues related to GDP and the level of the weighted average VAT rate, Romania ranked last among the CEE states.

“With a weighted average VAT rate of 14.2% (compared to the statutory rate of 19%), Romania collected about 6.7% of GDP from VAT, at a distance of 1.3 pp. GDP from Slovenia, which has collected 8% of GDP so far. weighted average VAT rate of 16.1% – we chose Slovenia as a comparison condition because it is the closest to us in the CEE group of countries in terms of weighted average VAT rate,” says the Fiscal Council.

It is worth noting the very good indicators of Bulgaria, with an economy structure relatively similar to our country and a weighted average VAT rate of 16.8%, which collected 9.2% of GDP, ahead of only Hungary with 10% of GDP – but with a much higher weighted average VAT rate ( 20.6%), which is equal to Latvia, but at a weighted average rate of 19.3%, second only to Hungary among the analyzed countries – and surpasses countries with a higher average VAT such as Lithuania, Estonia or the Czech Republic.

The modest VAT revenues reported by CEE countries are also the result of extremely high levels of the VAT collection deficit (VAT gap), an indicator that measures the effectiveness of VAT compliance and enforcement efforts.

Data from the European Commission show that Romania has a VAT collection deficit of €7.4 billion, i.e. a share of 35.7% of the theoretical revenue to be collected, the highest value in the EU and CEE.

Compared to the previous year, the deficit in Romania increased by 0.2 percentage points, and in the EU as a whole it decreased by 1.9 percentage points (to 9.1% from 11%). Estonia’s revenue deficit was only 1.8% (from 3.3% in 2019), Bulgaria – 6.3% (from 9.7% in 2019), Hungary – 5.1% (from 9.8% in 2019), Poland – 11.3% (from 12.7% in 2019). 2019), the Czech Republic by 11.9% (from 14.2% in 2019) and Slovakia by 13.9% (from up to 15% in 2019).

Representatives of our authorities refute the data of the European Commission

Lucian Heiush, Secretary General of the Ministry of Finance, stated when he was the head of ANAF that in Romania we do not have a VAT collection deficit of 35%.

“It’s not 35%. It is smaller. There is no such thing,” he confirmed, recalling that the VAT gap is a topic that is constantly being discussed.

In this regard, he said that he agreed with IMF representatives to create a service that will specialize only in VAT analysis in order to make correct analyses.

“In vain (the European Commission does not) come and tell me that they do not know what percentage of VAT is accounted for by IT evasion. Let’s be serious. I doubt that you have many VAT evasions in the IT field. But he fell into the VAT loophole because there is something going on there,” Geiusz said.

• “Based on my analysis, I recognize that payment compliance has a very large weight on the VAT gap.”

• “Many companies with different capital, from public to private, declare and do not pay. They are included in the VAT gap. Irrevocable debt is taken there as well.”

• “Any accountant when submitting a statement can (see no) that the corresponding agent does not have the corresponding amount. Suppose he has to pay 100 lei and has only 70 lei. What will not pay? VAT! They leave him as the last to think that maybe next month he should refund the VAT,” the head of ANAF also stated.

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