The IMF supports progressive taxation and recommends increased budget revenues from taxes

Progressive taxation would help the state to balance the budget, that iswill increase revenuesay the representatives of the International Monetary Fund, which on Friday ends his 10-day visit in Romania. The Social Democrats are happy with this news, who has been insisting for some time on this idea to the displeasure of the Liberals.

The IMF points outbut that the introduction of progressive taxation is almost impossible to do next year. By the way, expeRThe Fund recommends that the Government first remove from the many tax exemptions and facilities enjoyed by entire sectors of the economy. The expansion of the tax base could bring in additional to the budget revenues equivalent to 1.25% of the Gross Domestic Product. Extra money could also come from better tax collection Added value and by changing the system of property taxation so that the tax is more closely linked to the market value of a house or land.

Thus, according to IMF calculations,tax form will bring more money to the budget by:

– elimination of tax exemptions and facilities: + 1.25% of GDP

– better VAT collection: + 1.5% of GDP

– property tax reform: + 0.25% of GDP

Statements by Jan Kees Martijn – Head of the IMF Delegation in Romania: “The first requirement when it comes to tax reform is Sthe tax base should be cleaned up, multiple exemptions and preferential treatments should be removed. Doing so would make the tax system fairer, make it easier to collect taxes and increase revenue, as more people would pay their share.

Once there is a more complete and logical tax base, the authorities should see if the charging system is one that should be based on a single rate or a progressive one. Without a clear tax base you cannot have any of these rates.

When we think about progressive taxation, we have some arguments in its favor: the state could collect more money from those who earn more, which would help reduce the deficit and lead to increased budget revenues. It would also help reduce the large income inequities that exist in Romania.

The implementation of progressive taxation brings challenges in terms of collection. It is not easy to do this immediately. It is necessary for the Tax Administration to know all the sources of income that a person has. At this point, the information is source by source. This would make it difficult to successfully introduce progressive taxation in 2023 and it could be more realistic, given the decision to introduce it, to take effect after that date. But it is important not to delay any decision in this regard “, underlined the head of the IMF delegation in Romania.

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