The flat tax in Romania. A good economic strategy?

Cristian Socol (), Marius Marinas and Aura Gabriela Socol

MPRA Paper from University Library of Munich, Germany

Abstract: This paper evaluates the main effects of the implementation of tax flat system in Romanian economy. If accompanying measures are not going to be enforced, the introduction of the flat rate of 16% in Romania will lead to unsustainable budgetary deficits and inflationist pressures. The flat tax favors the workers with big salaries and also big and financially solid companies (which, mainly “export” the profit). It will attack the fragile macroeconomic stability. It is uncertain if it will lead to the increase of the degree of employment, having in view the fact that the contributions to the social insurances have a very high level. The alternative scenario is simple. Romania should have chosen to continue what it was confirmed to be a valid element of the economic evolution towards a European standard (progressive fiscal system).

Keywords: flat tax; fiscal policy; inflation; AD-AS model (search for similar items in EconPapers)
JEL-codes: E31 E62 H21 (search for similar items in EconPapers)
Date: 2007-04-05
New Economics Papers: this item is included in nep-acc, nep-mac, nep-pbe and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:3166

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