Social Monitor: Romania lags dramatically behind peers in tax collection rate
<p>In Romania, taxes represented 27% of GDP in 2022, well below the EU average of 40% but also below the average of comparable Eastern European countries: Poland (34%), Hungary (35%), Bulgaria (31%), according to the Friedrich-Ebert-Stiftung Romania Foundation quoting Eurostat data.</p>

<p>At a moment when Romania needs to thoroughly reconsider its taxation system in order to address the fiscal slippage, the Friedrich-Ebert-Stiftung Romania Foundation suggests&nbsp;that&nbsp;the progressive labor (income) taxation and slightly higher capital taxation&nbsp;is the most common model in the European Union.&nbsp;</p>

<p>Romania's tax structure focuses more on consumption compared to the rest of the European Union, the report published by the foundation argues. Taxes on consumption represent 37% of the total taxes collected in Romania, ten percentage points more than the EU average.&nbsp;</p>

<p>In the EU, countries tend to focus more on labor taxes, which represent 51% of total taxes collected, eight percentage points more than in Romania. Labor is taxed progressively in most EU states, bringing with it a more equitable distribution of the tax burden between low- and high-income earners, while Romania applies a single tax rate that perpetuates social inequalities instead of reducing them.</p>

<p>Also, capital taxes are lower in Romania, representing 20% ​​of all taxes collected, compared to the EU average of 22%.</p>

<p>Consumption taxes tend to be quite regressive; that is, they place a proportionally greater burden on those with lower incomes than those with higher incomes.</p>

<p><em>(Photo: <a href="https://www.dreamstime.com/" rel="noopener" target="_blank">Yunkiphotoshot/ Dreamstime</a>)</em></p>

<p><em>simona@romania-insider.com</em></p>