The flat tax rate contributed to an additional increase in GDP per capita, had a positive impact on broadening the middle class, and reduced tax evasion – which led to a more equitable distribution of income, according to a report conducted by ASE at the request of the employers' confederation Concordia and quoted by Cursdeguvernare.ro.

Concordia's leader, Dan Sucu, and Ionut Dumitru, who coordinated the report, argue in favour of not changing a system that works and is simple with something new that is more complex and risky. 

However, arguing for a simple system based only on keeping things simple is not productive per se. The progress tends to be driven by more complex systems. 

Separately, Ionut Dumitru admits that "when Romania is rich," it will have progressive taxation. In other words, only after the income discrepancies become wide enough will a system to address this problem be needed. 

Concordia's rhetoric against progressive taxation is not new – only it is now substantiated by academic work.

The study concludes that thanks to the flat rate, tax compliance has improved, contributing to a better collection of budget revenues and reducing the informal economy.

In addition, the work concludes that a progressive rate regime would not bring significantly higher budget revenues, but progressive taxation implies greater bureaucracy, additional administrative costs, more complex tax rules, and an increased risk of tax optimization on the part of taxpayers.

iulian@romania-insider.com

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