Munich Personal RePEc Archive

General Issue on the Romanian fiscal system

Dracea, Raluca and Cristea, Mirela (2006): General Issue on the Romanian fiscal system. Published in: microCAD 2006, International Scientific Conference , Vol. sectio, No. 16-17 March 2006 (16 March 2006): pp. 109-114.


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The arrangements of the economic and fiscal reform as well as the operating economy influenced the evolution of the fiscal revenues within 1990-2004, in Romania. Against the background of the State's receding involvement on the economic and social level, a fall of public costs generating a fall of the necessary budget to cover these costs occurred, amplified by the economic decline in Romania, registered in 1990.Compared to other sates, the average tax level in Romania is low around 30% of GDP, but it has an unequal distribution, while some of the tax payers allocate a tax level of 10-20%, others are forced to support a ratio of 50-60%. Critics consider that the introduction of a unique tax share is a hasty arrangement with no substantiation or impact analysis, jeopardizing the budget balance. Other increase in tax and duties, utilities costs, appearance of new taxes and reduction in budget costs followed. The renunciation to progressive levying of taxes (fiscal equity principle) and the introduction of unique tax share roused a series of pro and against reactions. Ignoring these controversies concerning work tax in Romania, the tax revenue and high social contributions remain an unsolved problem. In Romania, the fall of social security contributions may provide the elasticity of the work market developing the power to encourage internal and foreign direct investments as well as the consumption of the Romanian economy. The three important aspects of the Romanian economy are : the introduction of the unique tax share of 16%, the stimulation of work market and the blocking of qualified manoeuvre migrations abroad.

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