What happens in the coming weeks and next year regarding taxes and their impact on living standards is a good lesson in economic education. Not for governors or ruling parties, they know well why and how it got here, but for the population.

I am under no illusions, but here are some relatively simple things to keep in mind

The first, and perhaps the most important, is that no government or party, in Romania or elsewhere, gives him money for salaries, pensions or investments. The only money the parties have to do with them as they wish is subsidies paid from the state budget. Of them, which are by no means few, they pay for their television appearances, for example, to attract the electorate to their side.

When a Party/Government official claims that he got a raise or a pension or an investment, he is lying by silence. Because he never says where the increases come from, the fact that they only redistribute money collected from taxes and fees paid by everyone to those who borrow at (high) interest rates, which are still the responsibility of the electorate.

Today, we are able to cover a deficit of more than 100 billion lei through a combination of measures to increase revenues and reduce costs. This, at the risk of losing huge amounts of money from the European Union, is a fact that will quickly lead to a rating of the country not recommended for investment, that is, a hole from which we will not be able to get out for years.

The package for which the executive will take responsibility is to pay for accelerated wage increases in previous years, well above the rate of inflation or economic growth (wage-led growth). Many of these measures will be reflected in the prices of goods and services, which will rise, thus prolonging the period of inflation. This would be the second thing to remember, populist vote-buying measures are later paid for by high inflation and borrowed money, which also goes to the “beneficiaries”.

When parties promise salary/pension increases, and the budgets from which these payments are made are very scarce, they should no longer avoid the question of where exactly they will be financed.

The third thing to remember is that when they can no longer sweep rubbish under the carpet, politicians in government will never admit that they are responsible for the poor fiscal and revenue policies of previous years. You won’t see anyone admit that we promised and delivered pay and pension increases without the funding, moreover, we gave up revenue while giving tax breaks.

You won’t hear anyone admit that they relied on loans with low interest rates initially and higher interest rates later to make said payments.

Although the exploding national debt, the budget and current account deficits have grown simultaneously, the budget built on phantasmagoric revenues speaks for itself that it is.

The aforementioned shirking of responsibility will lead to a feverish search for outside scapegoats to divert attention from obvious policy mistakes, something we have been witnessing for months now.

It is already anecdotal to accuse Christian Guinea or Vlad Voiculescu of including tax reforms in the PNRR. For more than 3 years, the former minister of labor, a character with a sad memory, delayed the law on pensions and salaries, annoyingly repeating that he does not agree with the percentage of GDP that is written in the document for our grandfathers. and elders It would seem ridiculous to blame a program that brings you (if you respect what you assumed) the largest amount in the history of Romania, most of which is non-refundable, but here it is.

And no one is asking the very simple question of whether PNRR is somehow responsible for the deficit, although I wouldn’t be surprised to hear that it is

Another constant culprit of the marginal situation in which the budget has found itself is the private sector, which, because it is evil, greedy and a little thievish, does not keep up with public spending, evades taxes and optimizes . But this is not done by the entire private environment, but by the one led by foreign transnational capital and banks, which, according to their ingenuity, do not pay enough income tax.

The evidence is elegantly silenced, according to which the largest debtors to the state in all categories of fees and taxes (there can be no question of profit) are companies with state capital, alternately noted by its representatives in the CA. In order to punish and stop the fraud of these honest capitalists, they will have to be taxed on their turnover unless they have sufficient profits, or rather both. The right decision, isn’t it?

The good news is that multinational corporations and banks will probably swallow these markups, but in their ingenuity will easily pass them on to the prices of goods and services and the interest paid by guess who?

There is no free food and no substitute for sound and rational fiscal and financial economic policies. Remember, in general and especially in the year, dear taxpayers.

Photo source: Vlad Ispas | Dreamstime.com

N. Red: Daniel Oantsa is a leading expert in the BNR. The opinion expressed above does not bind the institutions with which it is associated.