OPTIMAL FISCAL SYSTEM AND PUBLIC FINANCE SUSTAINABILITY INDICATORS IN EAST EUROPEAN

COUNTRIES WITHIN THE EU27

BANU Ilie (author 1)
Ph.D. Student, Faculty of Economic Science, !"ucian Bla#a$ Uni%erity of Si&iu, 'omania,
ilie&anu(yahoo.com
BU)IU* Ioana+,-d-lina (author .)
Ph.D. Student, Faculty of Economic Science, !"ucian Bla#a$ Uni%erity of Si&iu, 'omania,
madalina/&utiuc(yahoo.com
A&tract0 The aim of the paper is to outline the characteristics that an optimal fiscal system has to fulfill.
Starting from the hypothesis that high-debt EU countries may be suffering from higher tax induced distortions to
their economy whereas the lower-debt counterparts will not, we expect taxes to influence public deficit rate and
study its influence on the level of public debt ratio and determine the regression equations. Further we discovered
using S!S software that the influence is stronger on individual countries studied than on European level.
Findings are a signal to be considered by policyma"ers when setting the automatic stabili#ers.
Key words: optimal fiscal system, public debt, public deficit, tax-to-GDP ratio
EL !"#ss$%$!#&$o': C32,C53, E63
() O*&$+#" %$s!#" sys&e+
Generally, a tax system promotes optimum performance, wen dealin! wit te "E, wic are#
-E$uity %balancin! social distribution of income in society and stimulate employment and
entrepreneursip&
-Efficacy %a'oidance of taxes tat produce distortions of te economy&
-Economy %referrin! to possible cost reduction in !o'ernment re'enue collection and payment of costs of
tax&
-Efficiency %promoted by a tax system optimal tat maximi(es !o'ernment re'enue !enerated&) %*ailey,
2++"&
*esides te "E,s te caracteristics of optimal tax system are di'ided into four cate!ories, accordin! to a
classification proposed by PricewaterouseCoopers %Commision, 2+-+&#
T#,"e (-So+e *oss$,"e .#""+#r/s o% # 0ood &#1 sys&e+
C"e#r *2r*ose Co.ere'& 3$ e%%$!$e'&
-.aises re'enues to fund public expenditure
-*alances te bud!et %o'er a period of time&
-/eets social ob0ecti'es
-1mpro'es uman de'elopment
-/inimises te administrati'e burden
-Clear and unterstandable rules
-Consistent wit wider %non tax& law and international
principles
- Consultation on policy and administration
S&r#&e0$! F#$r #'d &r#'s*#re'&
-2table and consistent, enablin! lon!-term business
in'estment
-3 fair 'alue for natural resources
-Encoura!es international trade
-Encoura!es can!e in bea'iour wic society as
a!reed on
- *ased on law rater tan te practice of tax autorities
- Consistently enforced
-1ndependent and effecti'e route for resol'in! disputes wit te
tax autority
2ource# Doin! *usiness, 2+-+
3ccordin! to recent studies, te 4affer cur'e is not perfectly symmetric, but asymmetric, wit a
maximum noted in te cart wit /, around a rate of 5+6) 7e study estimates tat te point /,
correspondin! to a maximum tax rate would be between 6+-5+6, tis rate bein! 'ariable accordin! to
countries, type of tax analy(ed and circumstances considered) %7rabandt and 8li!, 2++9&
F$02re (- L#%%er4s !2r5e re5$s$&ed
2ource# 7rabandt and 8li!, /) :) %2++9&) ;:ow <ar 3re =e <rom 7e 2lippery 2lope> 7e 4affer Cur'e
.e'isited;
3s for te fi!ure presented below te minimum tax rate t
min
is appropriate a minimum operatin! bud!et to
ensure minimum bureaucracy of a state wit maximum efficiency %for an ultra-liberal state in wic te
state?s role is reduced to a few 'ital functions, namely# defense, diplomacy, public policy&)
F$02re 2- L#%%er4s !2r5e
-++6




A
6(+#1
2ource# 7rabandt and 8li!, /) :) %2++9&) ;:ow <ar 3re =e <rom 7e 2lippery 2lope> 7e 4affer Cur'e
.e'isited;
7e optimal tax rate, noted t
+
, is te rate wic pro'ides te state, te lar!est amount of tax re'enues) 3ll
rates possible between points 3 and / on te !rap are te tax rates tat may be used in an efficient state
in economic acti'ity)
/aximum tax rate mar@ed on te !rap tmax, tends to -++6, but will ne'er reac tis amount) =en te
tax rate rises abo'e te optimum, t
+
, te tax yield will decline due to reduced tax base)
2tudies are broadly di'ided into teoretical and empirical ones) 7e former are mostly
econometrical in nature and are carried out trou! formal !rowt models) 7is offers a $uantitati'e
measurement of te effects of tax policy can!es) Empirical studies typically compare cross-country and
time-series data to estimate weter tere is a lin@ between taxes imposed and economic !rowt rates
obser'ed) 7e results differ between tem dependin! on te parameters cosen)
:owe'er, o'er time te results a'e become more pronounced in te sense tat taxes indeed affect
economic !rowt) %Aermeend =), 2++B&
1n tis sense, we present in te table below te lin@ between taxation and fiscal implications of policy
decisions on te de'elopment of a state wit te models studied)
T#,"e 2- S&2d$es o' &#1#&$o' #'d e!o'o+$! 0row&.
E'0e' #'d S/$''er
7(8829
-+5 countries o'er -95+-
-9B5
:oldin! a'era!e tax rates constant, a decrease in mar!inal tax
rates of -+6-points, increases per capita income by 5)"6
C#s.$' 7(88:9 23 CECD countries o'er
-95---9BB
-6-point of GDP increase in taxation reduces output per
wor@er by 26
/
T#1 re5e'2e
T#1 r#&e
tmin
t+
+
tmax
A-min
Le$,%r$&; e& #")
7(8879
CECD countries, -965-
-995
-+6- point of GDP increase in tax to GDP ratio reduces
!rowt by +)5--6-point
Me'do;# e& #")
7(8879
7eoretical and empirical
framewor@
-+6 tax cut increases in'estment by +)5-26, ne!li!ible effect
on !rowt
E2ro*e#'
Co++$ss$o' 72<<<#9
/odel simulations by
D8E27 model
-6 of GDP reduction of taxes increases GDP between +)5 and
+)B6
F="s&er #'d
He're/so'
2ample of 29 ric CECD
and non-CECD countries
o'er -95+--995
-+6-point increase in tax to GDP ratio reduces GDP !rowt
by -6-point
B#ss#'$'$ e& #")
72<<(9
2- CECD countries o'er
-95---99B
-6-point increase in tax to GDP ratio reduces per capita
output by +)3-+)66
B#r&o' #'d
H#w/swor&. 72<<>9
-B CECD countries o'er
-95+--999
-6 of GDP increase in distortionary taxation reduces GDP
!rowt by +,2-+,"6 points
Lee #'d ?ordo'
72<<:9
5+ countries o'er -95+-
-995
-+6-point corporate tax cut increases !rowt by --26-points
2ource# Aermeend =), .ic@ 'an der Ploe!, 7immer =)- 7axes and te economy# a sur'ey on te impact of taxes on
!rowt, employment, in'estment, consumption and te en'ironment, Ed!ar, 2++B, p) "5
3ccordin! to te economic literature a sustainable tax system is lin@ed to a sustainable public debt and
deficit and sustainable economic !rowt)
2) T#1-&o-?DP r#&$o w$&.$' &.e EU27
7e o'erall tax-to-GDP ratio of .omania was at 25)+ 6 in 2++9, nine percenta!e points lower tan te
E825 a'era!e %35)B6&) 7e le'el of taxation in .omania is te lowest in te E8 apart from 4at'ia, but
comparable to te le'el of taxation in 2lo'a@ia %2B)B6& and *ul!aria %2B)9 6&) =en sortin! te public
debt ratio from smallest to lar!est, .omania occupies te fort place amon! te E825 countries wit
23)66 in 2++9 and 3-6 in 2+-+ and it is tou!t to stabili(e as "+6 but wit te condition of a'in!
econonomic !rowt of about 26 considerin! an analy(e from E<) %/edre!a, 2+-2&
2till, te bud!et deficit in .omania was i!, in 2++9 bein! of -9 %place B amon! E825 sortin!
descendent from te bi!!est to te lowest& and -6)9 in 2+-+ %place -- in E825&)
1n tis context we tried to find te correlations, if any, between te total tax to GDP ratio, te bud!etary
deficit in GDP ratio and public debt as percenta!e of GDP) <irst, we a'e presented in te followin!
table, te e'olution of total taxes startin! from -995 till 2++9, wen we found comparable date on
E8.C2737 databases, ordered from te bi!!est to te lowest rates considerin! te year 2++9)
T#,"e >-E5o"2&$o' o% &o&#" &#1es 7$'!"2d$'0 &.e SSC9 #s # @ o% ?DP $' UE27 A ,e&wee' (88:-2<<8
R#'/$'0
Co2'&r$es (88: 2<<< 2<<8
D$%%ere'!e7 $' *)*9
Re5e'2e
7M$")
E2ro9
2<<8
(88: &o
2<<8
2<<< &o
2<<8
2<<8
- Denmar@ "B)B "9)" "B)- -+)5 --)3 -+6,95B
2 2weden "5)9 5-)5 "6)9 --)- -")6 -36,3B-
3 *el!ium "3)9 "5)2 "3)5 -+)5 --)5 -"5,"-5
" 1taly "+)- "-)B "3)- 3)- -)" 656,-6B
5 <inland "5)5 "5)2 "3)- -2)6 -")- 53,B3B
6 3ustria "-)" "3)2 "2)5 -)3 -+)6 --5,+59
5 <rance "2)5 "")- "-)6 --)- -2)5 592,9B"
B Germany 39)B "-)9 39)5 -+)- -2)- 952,+5+
9 :un!ary "+)B 39 39)5 --)" +)5 36,653
-+ Feterlands "+)2 39)9 3B)2 -2 --)5 2-B,3B+
-- 2lo'enia 39)2 35)5 35)6 --)6 +)- -3,3+B
-2 4uxembour! 35)- 39)- 35)- + -2)- -",+9B
-3 Estonia 3")B 3- 35)9 -)- ")9 ",969
-" Cyprus 26)5 3+ 35)- B)" 5)2 5,955
-5 8nited Gin!dom 3")5 36)5 3")9 +)2 --)B 5"6,+55
-6 C(ec .epublic 36)2 33)B 3")5 --)5 +)6 "5,265
-5 /alta 26)B 2B)2 3")2 5)5 6 -,995
-B Poland 35)- 32)6 3-)B -5)3 -+)B 9B,525
-9 Portu!al 29)5 3-)- 3- -)5 -+)- 52,+B9
2+ 2pain 32)5 33)9 3+)" -2)3 -3)5 32+,56"
2- Greece 29)- 3")6 3+)3 -)2 -")3 5+,5+"
22 4ituania 25)5 3+)- 29)3 -)B -+)B 5,55B
23 *ul!aria 3+)B 3-)5 2B)9 -2 -2)5 -+,-2-
2" 2lo'a@ia "+)3 3")- 2B)B ---)5 -5)3 -B,-35
25 1reland 33)- 3-)5 2B)2 -")9 -3)3 "5,+56
26 .omania 25)5 3+)2 25 -+)5 -3)3 3-,65B
25 4at'ia 33)2 29)5 26)6 -6)5 -2)9 ",93B
-
E825 wei!ted
a'era!e
39)" "+)5 3B)" -- -2 -
2ource# Commission ser'ices , 2+--
Considerin! te member states of te European 8nion, .omania is ran@ed on te 26t place after 4at'ia)
1n comparison wit te states tat a'e attended te European 8nion in 2++", .omania ad in 2++9 te
lowest le'el, 256 , a le'el closed to te le'el in 2lo'a@ .epublic, ")B p)p lower tan in Poland, -+)6p)p
lower tan in 2lo'enia, -2)5 p)p lower tan in :un!ary, B)9 p)p lower tan in Estonia and 5)5 p)p lower
tan in Cec .epublic)
2)( E5o"2&$o' o% *2,"$! %$'#'!e s2s&#$'#,$"$&y r#&es $' E#s&er' E2ro*e#' Co2'&r$es ,e&wee' (88:
#'d 2<<8
=e a'e cosen to study te e'olution on one and in Cec .epublic, Estonia, :un!ary, Poland,
2lo'enia, 2lo'a@ia and te oter in .omania) 7e six countries proposed ad 0oint te European 8nion in
2++", one period before .omania and *ul!aria ad became members) =e a'e cosen te first two
indicators because of te limits imposed by te <iscal 7reaty tat almost all te states asumed %6+6
maximum public debt and 36 bud!et deficit&)
T#,"e B- E5o"2&$o' o% ,2d0e& de%$!$&C?DPA *2,"$! de,&C?DP r#&$os
B2d0e&
de%$!$&C
?DP
(88
:
(88
D
(88
7
(88
E
(88
8
2<<
<
2<<
(
2<<
2
2<<
>
2<<
B
2<<
:
2<<
D
2<<
7
2<<
E 2<<8
C;e!.
Re*2,"$!
-
-2)B -3)- -3)6 -")B -3)6 -3)6 -5)6 -6)5 -6)5 -2)B -3)2 -2)" -+)5 -2)2 -5)B
Es&o'$# -)- -+)3 2)2 -+)5 -3)5 -+)2 -+)- +)3 -)5 -)6 -)6 2)5 2)" -2)9 -2
H2'0#ry -B)B -")" -6 -B -5)5 -3 -")- -9 -5)3 -6)5 -5)9 -9)3 -5)- -3)5 -")6
Po"#'d -")" -")9 -")6 -")3 -2)3 -3 -5)3 -5 -6)2 -5)" -")- -3)6 --)9 -3)5 -5)3
Ro+#'$# -2 -3)6 -")" -3)2 -")" -")5 -3)5 -2 --)5 --)2 --)2 -2)2 -2)9 -5)5 -9
S"o5e'$# -B)3 --)- -2)3 -2)" -3 -3)5 -" -2)" -2)5 -2)3 --)5 --)" + --)9 -6)-
S"o5#/$# -3)" -9)9 -6)3 -5)3 -5)"
-
-2)3 -6)5 -B)2 -2)B -2)" -2)B -3)2 --)B -2)- -B
EU 27 w) # ) ) -2)5 --)9 -- +)6 --)5 -2)6 -3)2 -2)9 -2)" --)5 -+)9 -2)" -6)9
P2,"$!
de,&C?DP
(88
:
(88
D
(88
7
(88
E
(88
8
2<<
<
2<<
(
2<<
2
2<<
>
2<<
B
2<<
:
2<<
D
2<<
7
2<<
E 2<<8
C;e!.
Re*2,"$! -" --)9 -2)6 -")5 -5)B -5)B 23)9 25)- 2B)6 2B)9 2B)" 2B)3 25)9 2B)5 3")"
Es&o'$# B)2 5)6 5 6 6)5 5)- ")B 5)5 5)6 5 ")6 ")" 3)5 ")5 5)2
H2'0#ry B5)6 52)" 62)9 6+)9 6+)B 56)- 52)5 55)9 5B)6 59)5 6-)5 65)9 65 52)9 59)5
Po"#'d "9 "3)" "2)9 3B)9 39)6 36)B 35)6 "2)2 "5)- "5)5 "5)- "5)5 "5 "5)- 5+)9
Ro+#'$# 6)6 -+)6 -5 -6)B 2-)5 22)5 25)5 2")9 2-)5 -B)5 -5)B -2)" -2)B -3)" 23)6
S"o5e'$# -B)6 2-)9 22)" 23)- 2")- 26)3 26)5 25)B 25)2 25)3 26)5 26)" 23)- 2-)9 35)3
S"o5#/$# 22)- 3-)- 33)5 3")5 "5)B 5+)3 "B)9 "3)" "2)" "-)5 3")2 3+)5 29)6 25)B 35)5
EU 27 w)# ) 69)9 6B)3 66)" 65)5 6-)9 6- 6+)" 6-)9 62)3 62)B 6-)5 59 62)5 5")5
2ource# autor,s compilation after 7axation 7rends database
T#,"e : F E5o"2&$o' o% &.e &#1-&o-?DP r#&$o
To&#"
&#1es 7$'!")
SSC9 #s #
*er!e'&#0
e o% ?DP
(88
:
(88
D
(88
7
(88
E
(88
8
2<<
<
2<<
(
2<<
2
2<<
>
2<<
B
2<<
:
2<<
D
2<<
7
2<<
E
2<<8
C;e!.
Re*2,"$! 36)2 3")5 35 33)3 3" 33)B 3" 3")B 35)5 35)" 35)- 36)5 35)2 35)5 3")5
Es&o'$# 3")B 33)5 3")" 3")3 32)5 3- 3+)2 3- 3+)B 3+)6 3+)6 3+)5 3-)9 32)- 35)9
H2'0#ry "+)B 39)3 35)B 35)6 3B)3 39 3B)2 35)B 35)B 35)" 35)5 35)3 39)9 "+ 39)5
Po"#'d 35)- 35)2 36)5 35)" 3")9 32)6 32)2 32)5 32)2 3-)5 32)B 33)B 3")B 3")3 3-)B
Ro+#'$# 25)5 25)9 26)" 29 3- 3+)2 2B)6 2B)- 25)5 25)2 25)B 2B)5 29 2B 25
S"o5e'$# 39)2 3B)- 35 35)B 3B)2 35)5 35)5 3B 3B)2 3B)3 3B)6 3B)3 35)B 35)2 35)6
S"o5#/$# "+)3 39)" 35)3 36)5 35)" 3")- 33)- 33 32)9 3-)5 3-)3 29)2 29)3 29)2 2B)B
EU27w)# 39)" "+)- "+)3 "+)3 "+)B "+)5 39)6 39 39 3B)B 39)- 39)6 39)6 39)3 3B)"
2ource# autor,s compilation after 7axation 7rends database
*ecause te le'el of public debt reported to GDP is an important indicator re!ardin! te
sustainability of public finance to!eter wit structural !aps, we a'e to refer to te e'olution of public
debt, as well)
Public debt was found to lead to asymmetries in te le'els of taxes and primary expenditures across E8
countries, wit i! debt countries a'in! smaller public sectors and i!er taxes, at least in te sort run,
tan low debt countries, all else e$ual) /oreo'er, te data used in te cited study did not re0ect te
ypoteses tat capital mobility may increase tese asymmetries wile also tri!!erin! cross-country
asymmetries in te tax mix of E8 countries) 7us, wen capital mobility increases, te tax increases
made necessary by i!er debt-ser'ice obli!ations may fall mostly on labour income and consumption
rater tan on capital) *ut tese findin!s a'e se'eral implications li@e, i!-debt E8 countries may be
sufferin! from i!er tax induced distortions to teir economy wereas te lower-debt counterparts will
not) %Gro!strup, 2++2&
:owe'er, we consider tat !o'ernments are not payin! enou! attention on Hne!ati'eI taxes %for
example, acti'ities in connection wit !oods and ser'ices consumption wic are pollutin! te
en'ironment&, but tend to a'e i! rates for taxes on consumption %wic in fact !enerates wor@ places&,
maybe to i! in relation wit direct taxes and social contributions)
7e tax structure of .omania stood out in se'eral respects in 2++9) .omania as te nint i!est
reliance on indirect taxes in te E8) 1ndirect taxes supply "+)9 6 of total tax re'enue compared to a 35)5
6 E8-25 a'era!e, wile te sare of social contributions accounts for 35 6 %E8-25 3-)" 6& and direct
taxes only for 2")2 6 %E8-25 3-)- 6&) 7e sare of A37 on total tax re'enue in 2++9 %2")B 6& was te
fift i!est in te 8nion) 7e low le'el of direct taxes is mainly due to low personal income taxes
%merely 3)5 6 of GDP&, wile te E8-25 a'era!e is B6)
Central !o'ernment re'enue forms more tan alf of te total %6- 6&, wile local !o'ernment re'enues
are mar!inal, consistin! of only 3)5 6) 7e re'enue sares recei'ed by te social security funds account
for 35 6, almost four percenta!e points abo'e te E8-25 a'era!e %3-)"6&) 1n per cent of GDP, owe'er,
te re'enues of te social security funds are -)" percenta!e points below te E8 a'era!e, wic means
tat social contributions do not fulfill all te "E)
7e tax-to-GDP ratio declined noticeably between 2+++ and 2++" %see 7able "&, ten pic@ed up until
2++5 as GDP !rowt accelerated)
1n te subse$uent two years te tax ratio fell by two points due mainly to a sarp drop in A37 re'enue) 1n
2++9 te sort term economic outloo@ for .omania was worse tan expected wit a u!e GDP drop of
5)- percenta!e points %annual a'era!e& compared to 2++B) 1nflation remained ele'ated, a'in! been
pused up by increases in tobacco excise duties and te A37 rate %from -9 to 2"6& and i!er fuel
prices) <inancial mar@et conditions in .omania remained fra!ile)
.omania as recei'ed financial assistance %trou! a borrowin! mecanism& from te E8 in 2++9 and
2+-+ in excan!e for a pac@a!e of fiscal measures suc as adoption of a draft pension reform, adoption of
a compreensi'e <iscal .esponsibility 4aw, full implementation of fiscal consolidation measures) 3
number of minor measures were a!reed on te re'enue side, includin! te broadenin! of te personal
income tax base to lunc 'oucers, incomes from capital !ains, interests on ban@ deposits and se'erance
payments as well as te broadenin! of te tax base for social security contributions to intellectual
property ri!ts)

%2er'ices, 2+-2&
2)2 S$+2"#&$o's ,e&wee' &#1-&o-?DP r#&$oA *2,"$! de,& r#&$o #'d ,2d0e& de%$!$& r#&$o w$&. SAS
*ro0r#++e
=e a'e used E2395 classification due to a widely Eurostat database compared wit Fational 1nstitute of
2tatistic wic assured te comparison between european member states)
7e purpose of te modellin! done in 232 pro!ramme is to i!li!t te conexion between te 'ariables
wen settin! te automatic stabili(ators %on one and te rate of bud!et deficit as percent of GDP, te rate
of public debt as percent of GDP and on te oter and total tax ratio as percenta!e of GDP&)
Generally, te fiscal policy influences te macroeconomic sustainability trow tree different
cannels# te effect of distortionary taxes, te pro-cycled public expenditures, and te effect of automatic
stabi(ators) 7e European Commission sow tat te ma0ority of fiscal policies witin te E8 are
discretionary) %Din!a, 2+-+&
=e a'e used te E8.C2737 database for te mentioned 'ariables) 1n order to be comparable we a'e
cosen beside .omania te six member states tat a'e became European 8nion members in 2++"
namely, Cec .epublic, Estonia, :un!ary, Poland, 2lo'enia and 2lo'a@ .epublic) =e a'e also
compared te results wit te E825 wei!ted a'era!e)
- T.e $'%"2e'!e o% &#1-&o-?DP r#&$o o' *2,"$! de,& r#&$o o' &.e e2ro*e#' "e5e"
1n order to process tis simulation we a'e used E825 wei!ted a'era!e re!ardin! te total tax-to-GDP
ratio and te !eneral !o'ernment !ross debt) 7e conclusions were#
- te probabilistic 'alue accordin! to <iscer-2neddecor calculated was +)9"56
- te same wea@ influence is re'ealed wen calculatin! te 'alue for 2tudent distribution e$ual wit +)+5
%wen te 'alue is close to + it means te influence is wea@&
<or te !eneral form of te re!ression e$uation, wic is#
E$uation %-& JKaLbMN,
te 'alues for a and b are te followin!# a$%&.'&(') Ocorespondin! to a 7K+)B6 and p%t&K+)"-P, and te
'alue for te re!ression coefficient is b$*.++,() %7K +)+5, iar p%t&K+)9"56&) 7us, te re!resion e$uation
becames#
E$uation %2& JK59)"9B"2L+)--5B2M8E25P<
<or exemple, if te tax-to-GDP ratio in 2++9 was 3B)"5 ten te public debt to GDP considerin! te
european le'el becames#
E$uation %3& %&.'&(') - *.++,()./(.'%$ 0'.*)&
1n order to study te correlation coefficient, accordin! to Pearson, 232 pro!ramme use te followin!
formula %Doot(, 2+++&
E$uation %"& CC..E4 %N,J&K
7e correlation coefficient can ta@e any 'alue between O--,-P) =en te 'alues are closer to -, tat means
a ti!t relationsip)
3fter, analisin! te correlation coefficient between te two 'ariables and te result was +)+-9 wic
means a wea@ relationsip between te 'ariables acordin! to E8.C2737 databases)
- T.e $'%"2e'!e ,e&wee' *2,"$! de,&-&o-?DP o' &#1-&o-?DP r#&$os #& e2ro*e#' "e5e"
7e re!resion e$uation becames of te two 'ariables becomes#
E$uation %5& .presfiscaleQP1* K 39)39 L +)++3-9M .datorieipubliceQP1*
7e 'alues ta@en for 'ariable a is t$+).&+, and p1t2$*.***+ , and for te re!ression coefficient b we
obtain t$*.*,, iar p1t2$ *.&',0
7e correlation indicator does not can!e for te same 'ariables e'en if we can!e te influences) 1n te
!rap below we present te relationsip between te 2 'ariables#
F$02re (- T.e re"#&$o's.$* ,e&wee' &#1-&o-?DP r#&$o #'d *2,"$! de,&-&o-?DP #& &.e E2ro*e#' "e5e"
2ource# 3utor,s compilation usin! 232 software
7e !rapic as been !enerated wit te GP4C7 procedure in 232 pro!ramme and outlines te liniar
relationsip between te 'ariables anali(ed, a'in! set te trust limits to 9+6 probability)
- T.e $'%"2e'!e o% &#1-&o-?DP r#&$o o' *2,"$! de,&-&o ?DP r#&$o $' Ro+#'$#
Considerin! te same databases, and a'in! tax-to-GDP as independent 'ariable, te re!ression e$uation
becomes#
E$uation %6& .D37pbQP1* K 26)5+5L +)+B- x .pres)fiscaleQP1*
<or exemple, if we will a'e an increase of -+ p)p of tax-to-GDP ratio in .omania, te public debt ratio
in GDP will rise wit +)B- p)p) 7e re!ression coefficient %.K+)3"& means tat te relationsip is not at
all stron!, but stron!er as it is on te E8 le'el)
- T.e $'%"2e'!e o% *2,"$! de,&-&o-?DP r#&$o o' &#1-&o-?DP r#&$o $' Ro+#'$#
1n tis case te re!ression e$uation becames#
E$uation %5& .pres)fiscaleQP1* K -2")253 L -)"B x .datpbQP1*
Considerin! .omania, an increase by -+ p)p of te public debt-to-GDP !enerates an increase by -")B of
tax-to-GDP ratio)
F$02re 2- T.e re"#&$o's.$* ,e&wee' *2,"$! de,&-&o-?DP r#&$o #'d &#1-&o-?DP $' Ro+#'$#
2ource# 3utor,s compilation usin! 232 software
Comparin! te two fi!ures %te E8 le'el and .omania&, we came to te conclusion tat in te case of
.omania te increase of tax-to-GDP determined an increase of public debt , wic on te E8 le'el we
couldn,t mention)
- T.e $'%"2e'!e o% *2,"$! de%$!$& F&o-?DP r#&$o o' *2,"$! de,&-&o-?DP r#&$o o' EU "e5e"
1n tis case te re!ression e$uation becames#
E$uation %B& .datpbQP1*K 59)22- L %--)6B"""&M.defbu!QP1*
7e 'alues corespondin! to 'ariable a are t$'+.)', and p1t2$*.***+ , and for te re!ression coefficient b
we a'e t$-/.)% Ri p1t2$*.**,,)
7e correlation coefficient .K-+)5++2 means a stron! but ne!ati'e relationsip) 1f te public deficit-to-
GDP increases , it will also increase te public debt-to-GDP ratio, an answer we expected)
- T.e $'%"2e'!e o% *2,"$! de,&-&o-?DP r#&$o o' *2,"$! de%$!$&F&o-?DP r#&$o o' EU "e5e"
1n tis case te re!ression e$uation becames#
E$uation %9& .defpbQP1*K -6)25255L %-+)+29+5& M.datpbQP1*
7e 'alues corespondin! to 'ariable a are t$).(% Ri p1t2$ *.*+%(, and for b are t$ -/.)% Ri p1t2$*.**,,S
te correlation coefficient bein! te same)
F$02re >- T.e re"#&$o's.$* ,e&wee' *2,"$! de%$!$&F&o-?DP #'d *2,"$! de,&-&o-?DP o' EU "e5e"
2ource# 3utor,s compilation usin! 232 software
- T.e re"#&$o's.$* ,e&wee' *2,"$! de%$!$&F&o-?DP r#&$o o' *2,"$! de,&-&o-?DP r#&$o $' Ro+#'$#
1n tis case te re!ression e$uation becames#
E$uation %-+& .datpbQP1*K -5)-9 L %-+)66&M.defbu!QP1*
7e 'alues corespondin! to 'ariable a are t$%.+*, and p1t2$*.**) , and te 'alues for te re!ression
coefficient b are t$-*.(& Ri p1t2$*./&)+)
- T.e re"#&$o's.$* ,e&wee' *2,"$! de,&-&o-?DP r#&$o #'d *2,"$! de%$!$&F&o-?DP r#&$o $' Ro+#'$#
1n tis case te re!ression e$uation becames#
E$uation %--& .defbu!QP1* K --)9"L %-+)+9&M .datpbQP1*
7e 'alues corespondin! to 'ariable a are t$-+.*&, and p1t2$*.)&/& , and te 'alue for te re!ression
coefficient b are t$-*.(& Ri p1t2$*./&)+)
2ome future researc teoretical and empiracal studies are neccesary in order to came up wit precise
conclusions about te influence of eac type of tax on te re'enue collection and if tey determine
'ariations on public deficit ratio as a percenta!e of GDP and public debt-to- GDP ratio)
>) Co'!"2s$o's
2tartin! from te caracteristic of an optimal fiscal system, were apply four main principles
% e$uit, efficacy, economy and efficiency& , we a'e presented some implications of te tax-to-GDP ratio
witin te E825)
.eferrin! to te o'erall tax-to-GDP ratio of .omania, wic is bein! te lowest in te E8 apart from
4at'ia but a'in! almost te same le'el li@e 2lo'a@ia and *ul!aria, wit a public debt still at a reasonable
le'el but continuously risin! and a i! public deficit considerin! te oter european states %ran@in! on
te Bt place in 2++9 and --t in 2+-+ sortin! from te bi!!est to te lowest&, we wonder weter te
fiscal system is sustainable on medium and lon! term or not>
Considerin! te economic crises wen te public re'enue collection declined more tan public
expenditure we a'e focused on findin! te relationsip tat may occor between tax-to-GDP ratio, public
deficit and public debt) 3nalisyin! data from te E8 le'el, usin! 232 pro!ramme, we couldn,t find a
relationsip between tax-to-GDP ratio and public debt due to te lar!e differences between countries on
many le'els)
3ltou!, we could find analy(in! te correlation indicator at te E8 le'el tat bud!et deficit ratio as a
percenta!e of GDP a'e an intense, but ne!ati'e relationsip wit public debt ratio to GDP ratio)
:owe'er, if we analy(e te east European countries in particular te relationsip can be stron! or
wea@ dependin! on te country% for example, on Poland, 2lo'a@ .epublic, 2lo'enia te
relationsip is wea@ and on :un!ary, .omania and Estonia& te relationsip is stron!)
Comparin! te !enerated results %from E8 le'el and .omania&, we came to te conclusion tat in te case
of .omania te increase of tax-to-GDP determined an increase of public debt durin! -995-2++9 , wic
on te E8 le'el we couldn,t mention %considerin! oter 'ariables nule&)
7e conclusions tat can be drawn by tis study is tat te political decision ma@in! sould
consider te corellation between te oter 'ariables,too, wen te tax-to-GDP modifies and wen settin!
parameters for automatic stabili(ators) 3lso, it as to consider te specific of te country in order to
respect te caracteristic of an optimal fiscal system because a wron! decision will a'e a i! influence
on public finance sustainability in a context tat already affects all te european countries but not only
tem) =e consider .omania as to ta@e some decisions but 'ery well fundamented in order to stren!t
te public finance sustainability)
Re%ere'!es
*ailey, 2) %2++"&) Strategic public finance. /acmillan Pal!ra'e, p) -36--35
Commision, E) %2+-+&) 3aying Taxes Study.
Din!a, E) %2+-+&) Despre stabili(atorii fiscali automati) p) 32)
Doot(, .) %2+++&) Statistic4 asistat4 de calculator cu a5utorul programului S!S p. +0%-+,*. 2ibiu)
Gro!strup, 2) %2++2&) Public debt asymmetries# te effect on taxes and spendin! in te European
8nion) 25-2B)
/edre!a, C) %2+-2, <ebruary&) Datoria publicT creRte necontenit) Ce creRtere economicT trebuie
sT a'em astfel UncVt sT nu fim sufocaWi Un urmTtorii 5 ani) E<)
2er'ices, C) %2+-2&) 7axation trends in te E8 2+--, p) 23B-2"3)
7rabandt and 8li!, /) :) %2++9&) ;:ow <ar 3re =e <rom 7e 2lippery 2lope> 7e 4affer
Cur'e .e'isited;)
Aermeend =), .) ') %2++B&) Taxes and the economy6a survey on the impact of taxes on growth
employment investment consumption and the environment Ed!ar) p.'0
7ercet4ri reali#ate 8n cadrul proiectului 39S:;U <733+*,<:=>+.%<S<,0(%+ cofinan at din Fondul Social
European prin 3rogramul 9pera ional Sectorial :e#voltarea ;esurselor Umane )**,-)*+/.