In a business you can increase or decrease the price of the product you are going to sell when you know that you do depend neither for its manufacture nor for its commercialization on anyone. However, Romania’s budget is currently dependent on all those who use the money on Romanian territory.
The Right Measure
The measure to increase the value added tax (VAT) must be an anti-inflationary measure and to reduce the budget deficit, which aims to slow down the growth of demand on the consumer market, but in the absence of other anti-inflationary measures it can slow down the growth of supply. , the aim pursued can be canceled.
- The reduction of the demand aims at decreasing the price of the products, and through this decrease the aim is to decrease the inflation rate.
- The VAT increase measure must be accompanied by strategies for economic recovery and boosting the strong and already existing business environment on the Romanian market, domestic or abroad, perhaps even with the risk of removing, by closing or moving the headquarters to another country. , of small or new companies.
Positive effects following the application of this measure may occur in the medium term at the social level, by educating a management style aimed at optimizing a branch of activity, and, forced, at the national budget, by raising more funds in a short time, but the economic recovery is much more difficult at the moment.
The Right Terms
In the medium and long term, if the VAT remains at 24%, but the business environment does not recover, it is possible that large companies, which have established their headquarters in Romania, will seek to move it to a neighboring country, where taxes to the state budget will allow them to have a higher profit. The same effect can be registered if the business environment is unstable, but the taxes are lower, because it is important for investors and local businessmen to be able to predict what will happen to their business at least in the next 5 years, more than it matters for them to pay less by 2-3-5 percent. There you can use the calculate sales tax and make the proper calculation.
But in the situation of an unstable business environment, among the new foreign investors on the Romanian territory will be involved those who desperately need a product existing only in Romania, those who can earn more than they would have had by investing the same money on the territory a country cheaper in terms of taxes to the state or those who intuit the development of a certain field.
At this moment in Romania the demand on the consumer market decreases without the contribution of the VAT increase, which can produce effects as follows?
The VAT increase can contribute to educating Romanians in order to better manage their own money and ways to invest, new business plans can benefit from increased attention in connection with the reliability and sustainability studies of the business project.