How can one characterize the fiscal measures that have been discussed for some time? What do they reflect in relations with the private sector, with free enterprise? Are they relatively friendly or rather aggressive? Does it reflect more respect and approval of free enterprise or disapproval and contempt? If we look at the level of tax rates, we cannot say that the system is as unfriendly as taxes can be to free enterprise, or that it reflects disapproval or contempt for the latter.

Although it is clear that the problem of the budget in Romania lies largely in the expenditure part, in particular, looking at how it increases or the quality of expenditure, etc., the measures proposed by the ruling elite and which register a lot of criticism seem to be more on the side of increasing taxation. However, if you look more closely at the specific revenues that could be raised by raising certain taxes, you will see that they are needed not because of their size.

When you see that the revenues that some of the measures will generate are insignificant, you get the question above about the disapproval, disdain or aggressiveness of tax measures on private business.

The answer to these questions is “it depends”. It depends on the messages that the majority of taxpayers believe are being conveyed by the ruling elite through specific measures.

If a large number of people think that the first message that I formulate is not by convention, but as it naturally arises in the human mind, is important, it would be: “you who have the courage to conduct an honest business, know that we are here and we care, so that you don’t spoil as much as we want! When you get as far as we want, we’ll tax you a lot,” then we could say that the perception of what drives the ruling elite in their creation is/can be disapproval and sometimes contempt or hostility to free enterprise .

Perhaps Mr. Bolosh, the finance minister, felt that the fiscal package contained the danger of such a perception, and perhaps that is why he felt the need to manage the perception by telling the public, but perhaps also the various negotiating partners, that he did not want ” an aggressive system drove away investors.”

One measure that would inspire a message like the one formulated above without guidance is the additional taxation of those who own properties with a combined value of more than €500,000, to limit the measures recently reported in the press. In this case, the message would be “we will tax those who own this property more because, although we won’t have much additional revenue, we will win the election because we know the saying ‘let the neighbor’s goat die.’ “works in Romania”.

The same message could be taken from taxing cars worth more than €75,000: “we tax you because you have the nerve to run an honest business that provides your income for such cars”. Wouldn’t it be easier, for example, to slightly raise property or car taxes for everyone? Leaving aside the death of the neighbor’s goat, you can ask yourself: why does the government want to tax those who own several properties acquired by honest labor with an additional tax? What healthy trend does the state support, and we cannot understand it? Do we no longer have a housing problem? If Romania does not produce cars more expensive than 75 thousand euros, then we are doing selective protectionism by additional taxation of the class we have?

A second important message that the public can receive, again loosely phrased, might be: “You who have the courage to do honest business, have you not seen that there is considerable evasion in this country? Dodgers have no big problems! Every year for the past 33 years, the fight against evasion has been largely lost.”

Why is this battle always lost? Regardless of the answer we give to this question, the important thing is that the dodgers who win the fight do not lose when taxation, which is guided by the above-mentioned disapproval of honest business, is applied by taxing property that collectively exceeds 500 thousand euros, cars, more expensive from 75 thousand euros, etc., to give examples that seem to be a reality soon. Dodgers seem to be protected for the most part.

I don’t know if escapists systematically defend themselves, so I don’t claim that. But it seems important to me in this context to mention the result of the calculations of Mr. Gabriel Biris, who says, based on the data provided by ANAF, that in the best case, the tax authority spends 1 lei on the surcharge. , after control , 50 money (see his article entitled “On Chronic Inefficiency: Taxing the Unjustified”).

They show, in Dom Birish’s interpretation, which I have no reason to doubt, “the incredible ineffectiveness of the state in ensuring compliance with the law through tax audits.” Mr. Biris also says that it is worth noting that the “legislation in the field of taxation of sums that cannot be justified by Romanian taxpayers” has a “totally ineffective, but also immoral” design.

Again, I don’t know if runaways are actually protected, as they might be if the law were immoral, but if so, they are part of the “system”. They are part of the Symbiosis formed after 1990 by part of the former communist elites or their heirs and part of the new business class (in the sense defined by me in my article entitled “Symbiosis”). They are part of a Symbiosis which, although I believe it is in the process of diminishing, nevertheless continues to have an impact that cannot be neglected on the balance between economic and political power, a balance on which the health of our democracy depends.

What the ruling elite are doing through the measures described above with reference to the two messages – a fact that is obvious to anyone willing to observe – is to support, knowingly or not, the socialist dream. This dream is for everyone to be equal.

Initially, the ideologues of socialism believed that this could happen by confiscating the means of production. After the former socialist countries got rid of the confiscation of the means of production, impoverishing everyone equally, the propagandists of the socialist dream moved to a more progressive and sophisticated strategy: they let the honest capitalists produce, because that is what these people excel at, then they come and take so much, as much as they can through taxes to redistribute as they see fit, hiding the discretionary nature of the redistribution behind some wheezing ideas and “principles” about the role of the state in achieving greater economic equality, always on the horizon but never achieved.

Perhaps it seems to the ruling elite that we have lagged behind others on the path of progress towards the massive redistribution that only a socialist vision can aspire to, as the share of budget revenues has not exceeded, at best, 31-33 percent of GDP since 1995, while in in some EU countries, it approaches 45-50 percent of GDP.

We may have fallen behind on the mentioned path, which in my opinion is good because it leaves a proper place for the market, but we know that those who have walked it before us at least return 45-50 to a hundred budget revenues from GDP in the form of spending to provide citizens with quality goods and services. What’s bad about Romania is that the government doesn’t collect as much as it should, but still wants to raise tax rates to get more revenue.

The strategy of the ruling elite should be aimed at creating a set of incentives that will promote the initiation and development of honest business. Otherwise, on the one hand, Romania will always be behind countries that massively rely on honest business.

On the other hand, this strategy, based on tax increases or high taxation – even in those Western countries where there is no Symbiosis and tax evasion is minimized – cannot but gradually erode freedom.

In Romania, no matter how much pleasure the death of the neighbor’s goat brings, it cannot prevent most people from seeing that evasion is still relatively high and perhaps tolerated, causing society to accumulate a lot of contempt for those who benefit from it. and experts and business leaders believe that the level of corruption in the public sector is high (as stated in the Rule of Law Report 2023, Commission Working Document, European Commission).

N. Ed: Lucian Croitoru is the chief adviser on monetary policy to the head of the National Bank of Romania. The text is also published in a personal blog.