In a context where the fate of the PNRR is not clear, and Romania is still at risk of losing billions of euros earmarked for its modernization, Romanian business leaders strongly reaffirm their request to the governors to preserve the fiscal principle of the single rate applied to labor taxation, with the elimination of exceptions and economically unjustified benefits.

If the problem is to increase revenues to the budget, then here are 3 reasons for the undesirability of progressive taxation and 3 ways to solve the problem:

• Reason #1:

In the 20 years of application of the single quota in Romania, it has fully proven its usefulness: it has identified and taxed more than 150,000 jobs, contributed to the tripling of the country’s GDP and simplified the system of fiscal administration.

• Reason #2:

Romania still has labor costs above the European average, which does not contribute to the competitiveness of our country at all. The business environment is already experiencing an acute labor migration crisis. Super-qualified people leave the creative industries and productive industries en masse, students leave us who decide not to study in Romania anymore and then not to come back to work in Romania. We need a policy to attract and retain these people, not a policy to eliminate them.

• Reason number 3:

We have not identified a sound economic basis for Romania to implement progressive labor taxation. What will be the benefit in the economy? What good would it be in people’s pockets? What will be the benefit for the state budget? These are questions, the answers to which should be clear.

• Decisions to increase budget revenues from labor taxation are simple, but require political courage.

1. Standardization of a single labor quota by eliminating exceptions and benefits will lead not only to social and economic justice, but also to a direct increase in budget revenues. If this measure were accompanied by a cap on contributions, Romania’s competitiveness on the labor market would increase significantly.

2. The elimination of special pensions and the reform of the pension system will lead to the unblocking of the PNRR, which will stimulate the growth of the economy, ultimately stimulating the growth of the population’s income.

3. Accelerating the digitization of management and improving digital skills in management will contribute to increasing budget revenues.

“Also, Romanian entrepreneurs and the business environment want to know in which direction Romania is moving. We are about to lose our biggest chance to modernize Romania – the PNRR funds – while we are attacked by proposals to raise taxes to fill the budget of a dysfunctional administration. So far we have avoided a recession, but the loss of this money from the economy will hit Romania’s competitiveness and the development of much-needed infrastructure projects,” said Marius Stefan, President of RBL.