Modelling the Impact of VAT Fiscality on Branch-Level Performance in the Construction Industry—Evidence from Romania

Cristina Elena Badiu (Cazacu), Nicoleta Bărbuță-Mișu, Mioara Chirita, Ionica Soare, Monica Laura Zlati, Costinela Fortea and Valentin Marian Antohi ()
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Cristina Elena Badiu (Cazacu): Department of Finance, Accounting and Economic Theory, Faculty of Economics and Business Administration, Transilvania University of Brasov, 500036 Brasov, Romania
Nicoleta Bărbuță-Mișu: Department of Business Administration, Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Mioara Chirita: Departament of Economics, Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Ionica Soare: Departament of Economics, Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Monica Laura Zlati: Department of Business Administration, Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Costinela Fortea: Department of Business Administration, Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Valentin Marian Antohi: Department of Finance, Accounting and Economic Theory, Faculty of Economics and Business Administration, Transilvania University of Brasov, 500036 Brasov, Romania
Authors registered in the RePEc Author Service: Nicoleta Bărbuţă-Mişu

Economies, 2024, vol. 12, issue 2, 1-28

Abstract: Fiscal policy stands as a crucial pillar of economic development through its economic financing function. The regulatory effects of fiscality have been shown to reduce the ripple effects of uncertainties on economic growth within the EU. Unlike the average European economy, the Romanian economy has exhibited particularities concerning economic growth (ranking highly in economic growth among European nations in absolute terms), partly due to a more assertive fiscal policy applied to a consumption-based economy affected by hyperinflation (especially in the last five calendar years). The research issue stems from the premise of the lack of predictability in Romanian fiscal policy and its implications for the business environment. Our aim is to develop an econometric model of the fiscal effects of VAT on the business performance of the construction sector in Romania for the period 2010–2021. The methods employed involve empirical analysis and the development of consolidated industry-level databases followed by econometric modeling using the multiple linear regression method. The results of the research demonstrate that financial independence and solvency promote excessive taxation in emerging markets and developing countries, such as Romania, being correlated with the macroeconomic evolution of the respective state. Additionally, the results indicate that tax pressure can constitute a barrier to the sustainable development of firms, with direct repercussions for consumers. Attractiveness to investors is also affected, remaining a priority for companies. The study’s findings will enable the identification of the main impediments and opportunities brought about by VAT taxation on branch-level performance, proving useful for construction sector managers and fiscal policy makers in fostering sustainable industry development and establishing a sustainable fiscal regime to safeguard investors.

Keywords: fiscal policy; VAT; financial performance; sustainability; econometric model (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:12:y:2024:i:2:p:30-:d:1327940

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