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BNR chief economist Valentin Lazea announces, as a personal opinion, what austerity will look like in Romania: tax exemptions for IT specialists and builders disappear, VAT increases on medicines, food and tourist services, travel vouchers disappear Food and daycare increases the tax on dividends and for the sale of housing.
If the so-called Right sees as solutions only the layoffs in the budget area, plus the cut of salaries, bonuses and the freezing of pensions, then the bankers say that a much greater effort is needed to overcome the economic crisis.
IT professionals, small local entrepreneurs and employees of multinationals, who supposedly constitute the main electoral group of the Right, would suffer in turn, losing current benefits, spending more on transport, food, medicine, child rearing. , homebuying.
Economic growth in itself does not help reduce the budget deficit if both budget expenditures and revenues grow at the same rate, writes Valentin Lazea in an analysis for cursdeguvernare.ro. Economic growth can only help if budget revenues grow at a faster rate than nominal economic growth and budget expenditures grow at a slower rate than nominal economic growth.
Theoretically, Lazea says, the increase in budget revenues can be achieved in three different ways: by combating tax evasion and the “underground economy”; closing as many loopholes as possible due to the numerous tax and fee exemptions and exemptions that have proliferated in the Tax Code since 2015; raise certain tax rates. We understand that this is a taboo subject, which the government does not consider, both for ideological and economic reasons (persistence of the Covid-19 pandemic). However, sooner or later such increases will have to be taken into account, whether imposed by the European Commission (environmental taxes, carbon emissions, etc.) or by internal economic realities (property taxes).
Tax increases are difficult to accept politically. However, sooner or later such increases will have to be taken into account, whether imposed by the European Commission (environmental taxes, carbon emissions, etc.) or by internal economic realities (property taxes), writes Lazea.
What taxes can the government increase?
Increase VAT on medicines, food, soft drinks, HORECA (since international tourism is a form of export), water for irrigation, fertilizers, books, magazines, tickets to museums and sporting events. Currently, it is 9% and 5% for cultural property, respectively.
Cancellation of food vouchers and childcare vouchers.
Cancellation of tax exemption for salary income related to IT, construction, research and development sectors
Cancellation of gift vouchers, holidays, cultural, etc.
Cancellation of the exemptions from the payment of the tax on the buildings of public or private property of the state or of the administrative-territorial units.
Dividend tax increase (now reduced to 5 percent compared to 16 percent capital gains tax)
Increase the maximum limit to one million euros up to which companies with 1 to 9 employees owe an income tax of 1% of turnover, instead of an income tax of 16% (unjustifiably favors small companies that have a rate of return greater than 6 percent).
Increase the ceiling by which VAT is reduced by 5 percent on the sale of homes, from 90,000 euros (equivalent) to 140,000 (equivalent) (only enriches real estate speculators).
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