Weak Redistribution Dampens Economic Growth and Causes Strong Social Tensions

Florin Georgescu, Ana-Maria Cazacu () and Alexandra-Mariana Cojocaru
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Florin Georgescu: Bucharest University of Economic Studies
Alexandra-Mariana Cojocaru: Bucharest University of Economic Studies

Journal for Economic Forecasting, 2020, issue 4, 154-169

Abstract: The paper aims to assess the intensity and efficiency of using the redistribution function of public finance in Romania as compared to other countries in Europe. The analysis underscores that the major redistribution levers, i.e. tax revenues, social transfers and subsidies, as well as public expenditures in healthcare and education sectors are undersized as compared to the Romanian citizens’ needs. By assuming the setting-up and functioning of the minimal state, with limited tasks in the economy and society, Romania is characterised by one of the highest levels of the citizens’ income inequality, and this grim economic and social landscape proves the weak efficiency of the redistribution function. Hence, by taking an unbiased approach, the fiscal system needs to undergo a substantial revision by including into the taxation base all the resources in the society, without affecting the corporate sector, and placing the emphasis on the progressive taxation of personal income and wealth.

Keywords: redistribution function of public finance; tax revenues; social transfers; social and economic inequality; progressive taxation of personal income and wealth (search for similar items in EconPapers)
JEL-codes: D31 E10 E64 H20 H30 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2020:i:4:p:154-169

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