The tax collection level is only 32% of the GDP, as compared to other European states where the average tax collection rate amounts to 40-45% of the GDP. Economic analyst Ionel Blanculescu explains why this is happening:

“The main causes are tax evasion and fiscal fraud. There is much talk about fiscal fraud but nobody mentions tax exemptions in certain domains of the economy such as agriculture. If taxation were introduced in the field of agriculture, then we could exceed the 32% income tax collection level of the GDP, to reach higher percentages of up to 37%. “

The Finance Ministry announced that the re-organization of the National Agency for Fiscal Administration will focus both on the structure of the institution and the IT systems, in order to cut down on red tape and task overlapping. According to estimates by the Fiscal Council, tax dodging in Romania amounts to almost 10% of the GDP. Ionel Blanculescu:

“While the Fiscal Council estimated a 10% tax evasion level, that is almost 13 billion euros, based on my own analyses of the underground economy, the level of tax evasion is much higher, around 14 billion euros.”

Almost 2 months ago, Romanian PM Mihai Razvan Ungureanu called on the National Agency for Fiscal Administration to bring further revenues to the state budget worth 1.5% of the GDP that is almost 2 billion euros, and that could be achieved through more efficient audits in an attempt to fight tax evasion. The deadline set by the PM expires early next week.

It’s worth mentioning that 10 years ago, the World Bank was involved in a similar process in Bulgaria. Bulgarian authorities reduced the number of fiscal administrations and after restructuring, they managed to improve the level of tax collection to the state budget.