In Romania, taxes represented 27% of GDP in 2022, well below the EU average of 40% but also below the average of comparable Eastern European countries: Poland (34%), Hungary (35%), Bulgaria (31%), according to the Friedrich-Ebert-Stiftung Romania Foundation quoting Eurostat data.<\/p>\n
At a moment when Romania needs to thoroughly reconsider its taxation system in order to address the fiscal slippage, the Friedrich-Ebert-Stiftung Romania Foundation suggests\u00a0that\u00a0the progressive labor (income) taxation and slightly higher capital taxation\u00a0is the most common model in the European Union.\u00a0<\/p>\n
Romania’s tax structure focuses more on consumption compared to the rest of the European Union, the report published by the foundation argues. Taxes on consumption represent 37% of the total taxes collected in Romania, ten percentage points more than the EU average.\u00a0<\/p>\n
In the EU, countries tend to focus more on labor taxes, which represent 51% of total taxes collected, eight percentage points more than in Romania. Labor is taxed progressively in most EU states, bringing with it a more equitable distribution of the tax burden between low- and high-income earners, while Romania applies a single tax rate that perpetuates social inequalities instead of reducing them.<\/p>\n
Also, capital taxes are lower in Romania, representing 20% \u200b\u200bof all taxes collected, compared to the EU average of 22%.<\/p>\n
Consumption taxes tend to be quite regressive; that is, they place a proportionally greater burden on those with lower incomes than those with higher incomes.<\/p>\n