The current area-based property tax system in Romania is inefficient, producing revenue below its potential, while the taxable value determination is inequitable and complex. Indeed, the property tax only generated 0.6 percent of GDP in 2021 vs. the average of 1.8 percent of GDP in the OECD economies, or 0.9 percent of GDP in EU-27. Meanwhile, significant scope for improving both buoyancy and efficiency of the property tax system exists, not least through the elimination of multiple exemptions, addressing the current inadequate and fragmented self-declaration system of residential buildings that translates into incomplete fiscal cadasters.
Political risks appear to have subsided with the completion of legislative and local elections in October. The economy is slowly recovering, fiscal consolidation has continued, inflation has remained low, and the trade balance has improved. The recovery is expected to firm up in 2019 and the medium-term outlook is still promising, although risks remain mostly tilted to the downside.
frequency of VAT controls 16.0 0.24 New measures /1 Broadening of propertytaxbasis 5.0 0.07 Tax on household waste 12.0 0.18 Combined collection of PIT levy and customs tariffs 10.0 0.15 Total Expenditure Measures 138.2 2.04 Reduction of the wage bill 25.4 0.38 Reduction of net lending 67.8 1.00 Reduction of special accounts’ deficits 45.0 0.44 Authorities Proposed Other Revenue Measure Tax on civil servants in higher salary brackets /2 30.0 0.44 Sources: Gabonese authorities and IMF staff estimates 1/ New measures to be introduced in 2019 2/ The 2019 draft budget law