Romania's largest business organisations have jointly opposed proposals to introduce progressive taxation, urging political leaders to retain the country's flat tax system. Although the proposed changes would primarily affect individual income tax and not corporate profits, the organisations argue that such a move would negatively impact the broader economic and investment environment.

"Implementing a progressive taxation system does not automatically guarantee either sustainable growth in tax revenues or the reduction of economic inequalities," the organisations stated.

In a statement published on June 17, the business groups called for "political responsibility" and warned that a shift away from the flat tax "could undermine fiscal stability and competitiveness."

They stressed the need to "maintain the flat rate" and avoid any form of "progressive taxation (direct or disguised)."

The proposed progressive system would not apply directly to companies but rather to individual wage earners. Despite this, business organisations argue that the indirect effects — such as higher administrative costs, compliance challenges, and pressure on wage structures — would significantly affect the private sector.

The business organizations emphasize that progressive taxation would mean an increased administrative burden for taxpayers and tax authorities, and additional investments in staff training and tax education campaigns.

In addition, they mention that, with increased taxation, Romania's competitiveness decreases directly proportionally.

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iulian@romania-insider.com