Romania May Need To Raise Taxes, To Boost Econ – Ctrl Bker

"In order to take measures to support the real economy, but considering the budget has already reached a limit, one has two choices: decreasing some expenses and prioritizing the investments in the infrastructure, or increasing taxes," Lucian Croitoru, advisor on monetary policy of the central bank’s governor, said.

"I do not believe that during an electoral year, the authorities will cut expenses with capital goods or wages in the public system," Croitoru added.

Croitoru also said this is indeed a bad moment to increase taxes, which should have been set up to ensure a level of budgetary revenue of at least 36% of the GDP.

"As things look and according to the planned measures to boost economy, they are linked to higher tax rates. With a deficit of 3% of the GDP, the country could not go ahead with expenses unless having higher revenue. This should be done immediately (e.n. – by the future Government)," Croitoru said.

He said that under these conditions, the country’s budget deficit for 2008 would be at around 3% of GDP, being negatively influenced by unpredictable drafting of local budgets.