INCOME TAX SHIFTS – CAUSES AND EFFECTS ON ROMANIAN ENTERPRISES

Abstract

This paper aims to make a point in what the fiscal environment has been and is about in Romania. In 2008, the crisis was obvious to our authorities, who before declared with nonchalance that our system is way back from Europe’s and the crisis will pass near us. This didn’t happened and here we are, in front of it. The financial crisis has reduced the state budget incomes in a drastic manner, making the authorities to do what they knew better – put more fiscal weight in taxpayer’s burden. In this paper we will approach the minimum income tax amount, tax amount which has been the cap for more than 25% of the Romanian enterprises. The government took the easy way, more tax, no analysis on what the side effects of this tax over the economy will be on short-medium term. As you guessed, the only good that came from this measure was more money at the budget, but only for a couple of months because, as previously said, 25% of the enterprises closed their activity, meaning no more income tax payments, no more social and health contributions, no more wages paid etc. The budget has got a big hole because now, beside the fact that it didn’t cashed in from the closed enterprises, has to pay unemployment help for those who worked in those firms. As the crisis goes deeper, the government removed at the end of 2010 the minimum income tax amount, declaring with “drums and trumpets” that these measures are in order to revive the economy and the enterprises activity. We shall see about that.

Keywords

• SMe
• income tax
• level of taxation
• Romanian legislation
• global crisis.