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Personal Income Tax in Romania: Where to?

Author

Listed:
  • Anca BUZIERNESCU

    (University of Craiova, Faculty of Economics and Business Administration)

Abstract

The personal income tax is a topical theme because this tax has a very significant impact on the state budget in any country. There are two types of tax rates in the world that are expressed in percentage terms in relation to the value of taxable material (in the case of income tax, profit, etc.), others in the monetary unit on the value of the taxable material (in the case of excise duties). For their part, the percentage taxation rates may be progressive and proportionate. We have shown in the article that developed countries of the world practice in the case of individuals the progressive tax, and former communist countries, among them Romania, the proportionate one by the single tax rate. Our goal is to show that proportional tax, in addition to failing to comply with the principle of fiscal equity, cannot bring significant amounts to the state budget. We have come to the conclusion that in Romania, in 2018, the single tax rate for individuals of 10% will not be able to bring sufficient budget revenues to GDP; for example in 2017, the personal income tax on in Germany accounted for 8.9% of GDP, while in Romania only 3.5% of GDP. The solution that we see in the near future is the shift from single tax to progressive and global taxation for individuals.

Suggested Citation

  • Anca BUZIERNESCU, 2018. "Personal Income Tax in Romania: Where to?," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(20), pages 168-174, November.
    • Handle: RePEc:aio:fpvfcf:v:1:y:2018:i:20:p:168-174
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    More about this item

    Keywords

    income tax; progressive tax; single tax rate; global tax; the principle of fiscal equity.;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G00 - Financial Economics - - General - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H00 - Public Economics - - General - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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