The tax increase was a "fatal" mistake of the Bologna Government, USR deputy Claudiu Nasui, former Minister of Economy, drew attention on Thursday, according to whom the VAT increase brought less money to the state, in real terms, than last year.
"'Higher taxes, lower revenues. Unfortunately, the official figures for September show what I've been telling you for months. The VAT increase brought less money to the state, in real terms, than last year. The increase in VAT revenues is 7.7%, inflation is 10%. This is happening because of what is called in economics the Laffer Curve. A hard lesson in economics that the Government is learning at the expense of the population. The tax increase was a fatal mistake of the Bologna Government. It chose the easy path for the Government, but disastrous for Romanians," Nasui wrote on Facebook.
According to him, high taxes discourage economic activity, encourage tax evasion and impoverish the population.
"The government believes that if it increases taxes, revenues increase. This is not the truth. The economy does not work as a simple rule of three. If you double a tax, the revenues from it do not automatically double. On the contrary, above a certain level they may be halved. High taxes discourage economic activity, encourage evasion and impoverish the population. At a certain level of taxation, it becomes unprofitable to work (on the white) and profitable to risk evasion. So the state ends up collecting less with high taxes than it did with low taxes. And if we look at the figures, that is exactly what we see. The taxes increased by the Bologna Government decreased consumption, increased evasion and hit businesses that were trying to operate on the white," Nasui specified.
He believes that the solution was not to raise taxes again.
"The solution was to stop giving extra money to rectify the PNDL/Anghel Saligny, stop spending billions on business schemes with state money and make significant spending cuts at the budgetary level. Cut the subsidy for parties (which did not decrease). Unfortunately, none of this happened. It's not wasted time. Tax increases can still be reversed. No one is forcing us to transform a budgetary crisis into an economic one. But for that, a little understanding of the economy and courage are needed," claims Claudiu Nasui.
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