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Labor taxes in Romania: highest in Europe

Marţi, 10 iulie 2007, 0:00

The taxing level of the labor force in Romania is one of the highest in Europe, situation which affects the overall economic development, shows a World Bank study, cited by NewsIn on Monday. According to the study,another effect of the taxing level is that it reduces labor production and thus, affects the GDP.

Total spending on social securities (pensions, health, unemployment,work accidents) amount to half of one's salary. World Bank warns that pensions continue to be affected by structural weaknesses and impose an increased contribution rate which stimulates evasion and reduces contributions.

Romania pays in contributions 46.25%, less than Holland, Czech Republic, France, Albania or Poland. At the other end, Belgium, Great Britain and Irland pay less than 30% in contributions.

However, contributions from taxes amount only 6% out of GDP while in Austria, Italy, Poland and Slovenia such contributions represent over 12% of GDP.

The study explains that the rate for social contributions increased starting with the 90’s because of the increasing number of retired people and the decrease of the employees.

Thus this income decrease and spending increase affected the states’ budget. The current government thought to resolve this issue by increasing contributions.

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