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“It is not entirely normal that the average salary in the budget sector is higher than in the private sector,” says Valentin Lazea, chief economist at the National Bank of Romania, in a video conference organized by the Fiscal Council and Al. I. Cuza of Iași, according to Profit.ro.
NBR pump proposal to reduce spending. Property taxes must be increased
The NBR’s chief economist also claims that property taxes should be increased. In the absence of adjustment measures, Valentin Lazea warns that the budget deficit in 2021 will exceed 8% of GDP, given that the estimate this year by the Government exceeds 9%. This would put Romania in a negative context in the EU.
“We need a deficit of less than 7% next year. Even if this is done, it remains to be seen how the reduction below 3% can be achieved by 2024, which is an election year and we know what happens in Romania in the election years, ”says Lazea.
Read also: Klaus Iohannis is confident that the economy will recover. “Public finances are lagging behind. We have to admit that the deficit has increased a bit.”
NBR warning: a wage and pension freeze is not enough
“Without a reduction in the fiscal deficit, there will most likely be a correction in financial markets, even if the European Commission allows another year of adjustment.
“It would be necessary to reduce expenses, only that in the future it will be necessary to increase other non-salary expenses, expenses with the provision of hospitals, schools, infrastructure. Even assuming that a government will aim to freeze salaries and pensions, it is still not enough, because there are non-salary expenses that must increase, ”says Lazea, according to the cited source.
Read also: Florin Cîţu blames the increase in pensions and the doubling of allocations on the worrying forecast of the European Commission. “We cannot give in to PSD blackmail. It only did misfortunes for Romania”
The chief economist of the NBR, warning about the increase in pensions and subsidies
The NBR economist also points out that there are already regulated expenses that are going to produce effects, such as increased allowances or increased salaries of teachers.
Lazea also claims that a decrease in the number of state employees does not seem feasible given that the pandemic will lead to increased unemployment in the private sector.
“Will the state be allowed to lay off the budget and add the unemployed in the state sector to the already high unemployment in the private sector? That is a big question mark. But that does not mean that the state is tied hand and foot,” he says Lazea, according to Profit.ro.
Also read: Florin Cîţu announces the measures for 2021. “We do not reduce wages, we do not introduce taxes. It is a government program that does not promise sea and salt “
The NBR’s chief economist believes that property taxes should be increased, given that Romania has a capital problem and 80% of financial resources go to real estate.
“The entire tax system encourages people to take money out of the company and take it to the real estate,” explains Lazea
In addition, the chief economist of the National Bank considers that both the reduced dividend tax and the reduced property tax, including transactions, contribute to this situation, where the VAT rate of 5% has been increased to transactions up to 140,000 euros.
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