Romania collects the lowest taxes compared to countries in Central and Eastern Europe

In Romania, taxes accounted for 27% of GDP in 2022, well below the EU average of 40% and also below the average for comparable countries in Eastern Europe: Poland (34%), Hungary (35%), and Bulgaria (31%), according to official Eurostat data.

The low level of tax revenues in public budgets can lead to a weak capacity to finance public services such as health, education, infrastructure, and social protection, while also contributing to the dependence of state authorities on loans to cover the budget deficit.

In addition, Romania's tax structure is different from that of other EU countries. In Romania, taxes are more focused on consumption than in the rest of the European Union. Consumption taxes account for 37% of total taxes collected in Romania, 10 percentage points more than the EU average. In the EU, countries tend to focus more on labor taxes, which account for 51% of total taxes collected, 8 percentage points more than in Romania. Labour is taxed progressively in most EU countries, resulting in a more equitable distribution of the tax burden between low- and high-income earners, while Romania applies a flat tax rate that perpetuates social inequalities rather than reducing them.

Capital taxes are also lower in Romania, accounting for 20% of all taxes collected, compared to the EU average of 22%.

Consumption taxes tend to be quite regressive, meaning they place a proportionally greater burden on those with lower incomes compared to those with higher incomes. For this reason, EU countries prefer to rely more on direct taxes, such as those on capital or labor income. People with low incomes spend a large percentage of their income on current expenses such as food, housing, transportation, etc., compared to people with higher incomes, who are usually able to save. This means that in a system that relies excessively on consumption taxes, the tax burden will fall proportionally more on those with low incomes than on those with high incomes.

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The data used in the infographic was collected by Eurostat:

• https://webgate.ec.europa.eu/taxation_customs/redisstat/databrowser/view/TAX_EC_FUNC/default/table?lang=en&category=TAX_REVENUE
• https://webgate.ec.europa.eu/taxation_customs/redisstat/databrowser/view/TAX_TYPE/default/table?lang=en&category=TAX_REVENUE

Infographic: Pascalone Media SRL

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