Only the most naive of the naive could imagine that after the multi-election year of 2024 and reaching a budget deficit of 9%, significant corrections would not follow, despite electoral lies.
You don’t have to be an expert in macroeconomics; it’s enough to apply the micro rules.
A family living beyond its means and constantly borrowing, including to pay off due debts, eventually runs out of sources to borrow from because no one is willing to lend them money anymore or does so at astronomical interest rates, which quickly leads to bankruptcy. The only solution is to cut expenses and increase income.
The First Thunderclap of the Storm
So the question is not whether they were going to happen, but in what form they were going to be implemented. For now, the Emergency Ordinance "little train" has arrived as a still moderate mix because, ironically and unfortunately, the campaign that decisively contributed to this situation has not ended yet.
Probably only after the presidential elections will we reach a true correction solution, meaning real cuts and real tax increases. This, I fear, was just the first thunderclap of the storm.
For now, the corrections have been made very carefully with electoral considerations. Nominal cuts have only been made in categories that do not really fall within the electoral target of the coalition, such as students.
Overall, we observe that increases - in pensions, allowances, salaries - have been eliminated. Psychologically, this means that people will not see less money on their paychecks. They will be able to buy less with them, but it's one thing to be thrown directly into the hot pot of cuts, as in 2010, and another to slowly boil through inflation.
Holiday vouchers have not completely disappeared but have been halved. And layoffs will not be made because public sector employees are a key electoral area for the current coalition.
Most likely, layoffs will come after the presidential elections, which is good news only if indeed useless positions occupied by political clients are cut. And if a whole bunch of budget-hungry and useless institutions disappear. Two ministries and a few state secretary positions are nothing. Otherwise, we will witness an exacerbation, in fact, of the situation because the already often deadly incompetence of institutions will be accentuated.
For now, tax increases are perverse, not frontal, such as the increase in the dividend tax and the reduction of the threshold for micro-enterprises. And the total elimination of benefits for construction, IT, and agriculture may even seem ethical, right?
The worst, from a distance, is the return of the pole tax. That is a 1.5% tax on constructions that do not carry a building tax. It was introduced by the Ponta government in 2013 and then eliminated in 2015 after causing very negative effects.
Who Will Be Affected?
"Energy companies, for all energy infrastructure.
Agricultural companies, for all land improvements (irrigation installations, exploitation roads, platforms, fences, including for greenhouses, solariums).
Logistics companies, for platforms, fences, interior roads. All production companies, for access platforms, fences," explains lawyer Gabriel Biriș.
In fact, this tax will end up in prices, where the elimination of benefits for agriculture and construction will also end up. Was it moral to eliminate them? Perhaps. But since their introduction had an economic logic, their elimination should have had one too, along with an impact study. Are we stimulating Romanian food production?
But beyond economic explanations, these fiscal changes have two major fundamental problems that make them unacceptable regardless of their possible economic justifications.
Defiance and Lack of Direction
1.It is unacceptable for such measures to be taken literally overnight. For those directly affected, they disrupt any personal or business project.
Predictability is not only a constitutional principle; it is also a form of respect for taxpayers. And when the taxpayer is defied so shamelessly, the effects extend far beyond the directly affected area.
In fact, predictability, like state reform, was a principle in the founding act of the coalition, now only good for lack of toilet paper.
It is downright shameless to discuss with business representatives on Saturday without saying a word about tax increases and additions, only for them to find out about them in the press on Sunday.
When such things happen, all taxpayers feel in danger, all fear that the same could happen to them, and it is extremely likely to happen after the presidential elections, and everyone barricades themselves. That's why generally revenues end up decreasing instead of increasing.
2.Apart from the obvious electoral considerations, fiscal measures only reveal accounting desperation. No one has detected any vision or direction there. What are you sacrificing, what are you stimulating, what are the strategic areas? Maybe there are, but if so, they need to be explained in detail and patiently.
And because of this, electoral logic may not even work. Fury, frustration, and fear in society will overflow once again at the polls. It is very likely that, based on the same reasoning as in the case of Șoșoacă, Călin Georgescu will not run for office. But someone will still run from the extremist area, and if the level of anger is high, even a chimpanzee can capture it.
The little train Emergency Ordinance is the first proof that the coalition parties have not understood an essential lesson. Most people don't want miracles and magic wands. They want a little common sense, respect, clear communication, predictability, and a precise direction.
If these are missing, not even a resurrected Brătianu would win the elections, to paraphrase the coalition candidate, who starts the competition with extremism so poorly.