Romania’s central bank official argues for progressive taxation

Romania needs to revert to progressive income taxation to achieve social justice and public services and infrastructures like in Germany or France, Romania's National Bank (BNR) first deputy-governor Florin Georgescu said during hearings in the Parliament on Tuesday, February 12.

He spoke in front of the lawmakers about the too thick layer of low-income households in Romania and the concentration of excessive financial resources in the hands of a few, floating the idea of progressive wealth taxation.

“Unless you do this, you can't expect infrastructure and public services as those in France or Germany,” Georgescu said, according to local Adevarul.

"How progressive? Not very - not the Scandinavian model, it is too tight, [we need] a softer model," he answered himself. Even the supporters of the flat tax, elsewhere in the world, had to admit it does not work, he added.

Speaking of wealth distribution, he underlined that 36% of the employees are earning the minimum statutory wage and can't afford to get loans, he implied. At the same time, only 1% of Romanians can save money. When it comes to the bank deposits concentration, 0.13% of wealthiest depositors hold 14% of the total deposits while the 62% least wealthy ones hold 3.5%.

Georgescu spoke in favor of the wage hikes over the past years, which improved to a certain extent the economic disparities.

The PSD-ALDE coalition floated the idea of progressive taxation of the global household income in 2017, during the Mihai Tudose cabinet, but nothing came of that.

(Photo source: Shutterstock)