Many people take this into account and speak, pretending that they know the problems of the budget, but do not come with figures, with a specific analysis. I come and pass judgments!” said Academician Daniel Dayanu, the head of the Fiscal Council, at a debate at the BNR headquarters on Friday.

He talked about necessary and potentially painful tax reforms. “Some still philosophize that this deficit or low tax revenue is the embodiment of the social contract. What is the social contract? Mr. The President of the Senate talked about a car that does not catch. Well, the car is hot, and it is fueled with gasoline bought on credit from others,” says Dejanu.

We are in a very difficult situation from the point of view of the budget balance and external balance, – says the head of the Fiscal Council. “We have a very large structural deficit. It seems to be the largest structural deficit in the European Union, according to various estimates, it is around 6%. We must bring it to 3% if we want to enter the euro zone, if we want to have the necessary fiscal space to absorb external shocks, from wars to pandemics, crises,” the academician explains.

We cannot go on with such deficits! And this correction cannot be achieved by a miracle. There are no miracles in the economy!

“This correction means dissatisfaction, it means disappointment, it means anger, because you have a crisis in the standard of living! People are scared, don’t you see that pieces of drones are falling on Romanian territory, and we are going now with a macroeconomic correction that needs to be done and that we cannot postpone!” added Daniel Dayanu.

According to the academician, Romania made a huge mistake in 2015-2016 when taxes and duties were reduced and spending increased.

“It is rare to find something like this in modern economic history! It just doesn’t happen that way. We took tax revenues from 19% of GDP to 15% of GDP, a decrease of 4 percentage points of GDP! And we were warned, the governor knows! We were told: don’t play with fire, because you won’t be able to come back!”, says Dayanu.

What else did Daniel say to Dayan on Friday:

• This correction should be made both on the expenditure side and on the income side. Those who believe and actually mythologize the correction only in the expenditure part, support and feed the chimera. This cannot be done only in the expenditure part!

• Our tax system is rigged and hijacked by interest groups. It’s true and we have to say it, and unfortunately, those who are now screaming benefit from this tax system! They believe that Romania will be financed abroad. Sine die won’t fund it!

• These reforms should not be purely accounting, but should take into account social balances and what society can absorb. Society needs to be able to breathe, otherwise what have you done?

context:

A team of taxation experts, coordinated by lawyer Gabriel Birish, presented on Friday to Prime Minister Çolak and Governor Iserescu an analysis of the repeated amendments to the Fiscal Code, as well as their impact on society.

“Practically, in 7 and a half years, only 47.6% of the points of the New Fiscal Code remained in their original form. Moreover, the most important changes were made in the period 2017-2019 by the authors of the new Fiscal Code, which is at least inappropriate and indicates a certain superficiality in the development of the new Fiscal Code,” the analysis says.

This research was carried out between March and June 2023 by the team formed by the founders of the Institute of Taxation – Gabriel Birish (lawyer), Ruksandra Gianu (tax consultant), Ana Bobirka (university lecturer, PhD, ASE) together with Roksana Vojka-Dorobantsu ( university lecturer, PhD, ASE), Paul Chichernea (lawyer, tax consultant), Philip Cook (tax consultant).

The authors would like to thank Valentin Lazea (Chief Economist, National Bank of Romania), Delia Kataram (University Lecturer, PhD, ASE, Tax Consultant and Tax Partner – Viboal), Dan Manolescu (President of the Chamber of Tax Consultants) Gabriel Sink (Managing Partner of TMF Group) and Nikolay Sichin (Head of Tax at OMV Petrom) for kindly reviewing this study and providing quality comments.