The burden must be shifted entirely to the public sector in order to narrow the government deficit by reducing waste and conducting reforms, because that is also provided for in the government plan: everyone pays, economist Iancu Guda, honorary advisor to Prime Minister Ilie Bolojan, said on Tuesday.
"The message is, as it has been publicly transmitted, from now on no more tax increases. The burden must be shifted entirely to the public sector, through waste reduction, through reforms, because, in the end, I would also say the government plan: everyone pays. So, after what the private sector had to put up with, it is imperative to cut waste in the public sector. We spend almost 30% more than receipts in 2024, with the difference having decreased to 23% in 2025. We still have to continue on this path of adjustment and fiscal responsibility, so that, by 2030, we reach a deficit of less than 3%," Guda said at a conference organised by Romanian Business Leaders.
On another note, the economist added that the taxation system for micro-enterprises introduced in 2017 did not contribute to accelerating the reinvestment of profit, but only gave higher dividends.
"Speaking of the impact of the cap on micro-enterprises in 2017, if we look at the increase of the turnover acceleration curve, it had no impact, so it did not contribute to accelerating the reinvestment, I don't know, of the profit in the company.... Higher dividends were distributed, that was the reality. If we take the curve of companies founded in 2010 to how much they reached in 2020 or of companies founded in 2015 to how much they reached in 2024, also to RON 2.6 million, the difference coming from inflation. So, the reality was that when the micro-enterprises were taxed up to 1 million (the annual income ceiling up to which a company is included in the category of micro-enterprises, respectively one million euros ) - when it was considered a micro-enterprise (since 2018) -, do you know what has improved? The companies' profit has increased, meaning they have no longer put personal interest expenses on the company. Do you know that before 2015 a micro-enterprise was making a loss of 2% and in 2018 - 2010 it was already making a profit of 25%? How can a micro-enterprise from minus 2 to plus 25% suddenly show itself such a profit?" he said.
Basically, the only beneficial aspect of the taxation on the turnover of micro-enterprises was the fact that the companies showed their profit.
"Taxation on turnover for small companies - the only beneficial aspect was that they no longer charged personal interest expenses on the company and showed profit. But that is not the way to show transparency and reduce the underground economy, that the effect is treated, not the cause. The way is to be fair in business, with fair taxes, and micro-enterprises under EUR 100,000 are still taxed by turnover. So, for small companies at the beginning, when they start the business, it is a regime comparable to other countries in the European Union, but the business taxes, despite these increases, are lower than what happens elsewhere in the European Union: corporate tax of 16%, the European average is 23%, the tax on dividends is also 16%, the European average is 24%. And I think it is still necessary to have a lower taxation on companies and, looking to the future, I don't see what other taxes can be increased, that is, they have already aligned," added Iancu Guda.
Romanian Business Leaders organised a live news conference on Tuesday, in which it presented the results of a study conducted in partnership with Iancu Guda on the evolution of the business environment in Romania.
The analysis was conducted based on millions of financial statements from the last years and provides a relevant and updated x-ray of the Romanian entrepreneurial environment.
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