The news that around 30 percent of the Romanian labor force find employment on the black market and do not pay taxes to the state surely comes as no surprise to anyone. Add the knowledge that many of those who are properly registered in employment do not declare their full salaries to the state, we can understand one of the main reasons why the Romanian government is incapable of fiscal sustainability and can’t seriously devise an economic policy worth the name.
Nobody anywhere likes paying taxes, but most people understand that the services provided by the state, the things that make modern life fundamentally possible like schools, health and social services, public transport, infrastructure, national defense and so on, must be paid for. There is a certain degree of faith involved in giving money to the state and the feeling of getting good value in return. There is also a need to know that everyone is paying their fair share.
It seems that in Romania faith in getting value for ‘your tax dollar’ has collapsed and the belief that no one else is paying their taxes has eroded everyone’s willingness to do so.
In some ways the situation is similar to that of Greece, where rampant corruption at the top led to widespread tax-evasion throughout the population. Fortunately no Romanian government has had the vision to offer greater and greater benefits to bribe the electorate while borrowing mind-boggling amounts of money to pay for it all.
The USL coalition government has announced its intention to reform the current flat-rate tax system if it wins the Parliamentary elections later this year.
Obviously this is a progressive step in the right direction, but even more important and urgent is the need to persuade the entire population that paying taxes is a fundamentally good thing.
On general taxation, Romania really is starting from scratch.
By Ronnie Smith, Guest Writer
Ronnie Smith is Scottish and now lives in Romania, working as a professional training business consultant and communication coach. He is also a teacher of political science, a political and social commentator and a writer of fiction.
The views expressed are his own and do not necessarily reflect those of Romania Insider.com.
(photo source: Sxc.hu)