Progressive Taxation Would Hike Workforce Costs - Romanian Ctrl Bk Official

A return to progressive taxation would not help balance the budget deficit, since taxes collected on revenue represent some 3% of the gross domestic product, but personnel costs would surge, Thursday said Eugen Radulescu, audit manager at the central bank.

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"There is a margin in which the flat tax brings in more revenues, since taxation on revenues only covered 3% of the GDP. A return to progressive taxation would not balance out the budget (...) This would only boost overall costs," Radulescu told a conference on economic issues.

He went on saying that employers currently pay five types of social contributions, while employees pay three, added with the 16% flat tax, which means that in 100 units of revenue, 88.1 units are taxes.

"Should we return to 2005 levels, namely with 40% taxation, and without changing social contributions, then 100 units of revenues would be taxed with 104.5 units," Radulescu said.

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