Head of Romania's Fiscal Council calls for fair burden sharing of fiscal consolidation

Cutting the special pensions or streamlining the public administration is not enough for fiscal consolidation, and boosting the budget revenues by "extracting" resources from categories of taxpayers is necessary, head of Fiscal Council Daniel Daianu argued.

Romania has to cut its budget deficit from around 6% of GDP currently to under 3% of GDP. Its tax revenues are below 30% of GDP and the total budget revenues are not much above 30% of GDP compared to the European Union average of well above 40%.

He also added that the "extraction" of resources should be done as equitably as possible. Allowing high inflation and hiking the VAT rate do not meet the equity criterion as they hit the lower-income categories, he argued.

"There is a distributional war going on in the Romanian society because someone has to pay: either we all pay, or only part of us pay. And I hope we don't end up in a situation where we all pay, but not equally," Daianu explained, quoted by Profit.ro.

"There is a war, and it will be a distributional war because everyone would like to see their income untouched. Everyone feels special and feels he/she shouldn't have to pay. But yes, we all have to pay. [...]These structural reforms are known to be painful and take time. That is why there is also money allocated to Romania to carry out [and cushion] these reforms," said the president of the Fiscal Council.

(Photo source: Inquam Photos/George Calin)