When devising the 2011 budget, which is already being discussed,a key question cannot be avoided: how can the 36 billion RON (thatis 8 billion euros) gap between spending and revenues benarrowed?
Where can the Government cut 1 or 2 billion euros in expenses andwhere can it boost revenues by 1 or 2 billion euros so that thebudget deficit could go down towards 5 billion euros, that is 4% ofGDP?
The equation is simple: on the one hand, we have about 46 billioneuros in expenses, and, on the other, about 38 billion euros inrevenues. The deficit stands at 8 billion euros, that is 7% of GDP.What will the Government do to bring the deficit down to 5 billioneuros, namely where can 3 billion euros come from?
More than one quarter of the consolidated budget revenues, i.e. 11billion euros, come from VAT and excise duties. These have alreadybeen raised, so a new hike is out of the question.
Another 8 billion euros are revenues from social contributionsgoing towards pensions. Can the social security contribution (CAS)be increased? The business sector would probably hit the roof,considering an employer's expenses for a 1,000 RON net wage amountto 1,800 RON because of the very high CAS.
An increase in the health insurance contribution would also add tothe employer's payroll expenses, and the revenues of theself-funded institutions are parafiscal taxes that have alreadygone up over the last few years.
This leaves the profit tax, the income tax or the propertytax.
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