Prime Minister Ilie Bolojan complained on Thursday, January 22, of imbalances in the local administration, referring to high dependence on transfers from the state budget, low revenues from local taxes and fees, but also to expenses with salaries much higher than local revenues. The Prime Minister carried out a comparative analysis with other EU states and found that, in general, European local administrations cover their staff salaries from their own revenues, something that does not happen in Romania either. Many of these imbalances would be corrected by undertaking the reform of the administration.
Prime Minister Ilie Bolojan claims, on Thursday, imbalances in local administration, after comparing the data collected in recent years about local administrations in EU countries.
First of all, the prime minister talks about high dependence on transfers from the state budget.
Revenues from transfers from the state budget represent 7.43% of GDP, and own revenues (other than transfers) represent 1.51% of GDP.
“The above indicators show that the share of transfers in local budgets is 83.1%. Comparatively, the average of transfers in the EU is 51.1%,” Prime Minister Ilie Bolojan said.
According to him, another imbalance refers to the fact that revenues from local fees and taxes are among the lowest.
According to the data provided by Government officials, revenues from local taxes and fees in Romania represent 0.74% of GDP, while the European average is 3.68% of GDP.
Comparatively, property tax revenues are:
in Romania = 0.55% of GDP
EU average = 1.85% of GDP
“Romania is far below the EU average due to the reduced tax base (exemptions), the low level of taxes and collection problems. Under these conditions, the pressure falls on transfers from the central budget”, the prime minister also said.
The third imbalance identified by the prime minister from the comparative analysis of the data refers to expenditure with salaries much higher than local revenues.
“In Romania, the expenditure on wages in local administrations = 3.07% of GDP, against 0.74% of GDP, revenues from local taxes and fees. In the EU27, the expenditure on wages = 3.59% of GDP, against 3.68% of GDP, revenues from local taxes. In the EU, on average, salaries in local authorities are covered from own resources. In Romania, expenditure on wages of local authorities is more than three times higher than own income”, explains the prime minister.
It also refers to high local investments.
“Local investments in Romania = 2.98% of GDP, compared to 1.56% of GDP, the EU average — the highest value in the EU. Compared to the own resources of the local authorities in Romania, which represent 1.51% of GDP, the investments are almost double. Investments at the local level are massively supported by national programs (Anghel Saligny) and European funds,” Bolojan added.
According to him, “there are significant differences between the localities in Romania: county seat municipalities and localities with income-generating economic activities are in a better situation, while the other localities face even greater imbalances”.
“Even if the administrative systems differ from one country to another and can influence the indicators, the comparisons remain relevant”, says the prime minister.
He states that the administration reform package, for which the Government is to assume responsibility, “contributes to the correction of imbalances, makes the administration more efficient and citizen-oriented”.
The package, according to the data provided by the Government:
increases local authorities’ own revenues and contributes to the co-financing of local investments;
reduce personnel expenses in overstaffed authorities;
the money saved will be directed towards better services for citizens;
stimulates local economic development;
decentralize powers to local authorities;
supports performance in administration.
The first meeting of the Working Group established at the coalition level, for the distribution of taxes to local public administration authorities, took place on Wednesday at the Victoria Palace, with Prime Minister Ilie Bolojan participating in the discussions.
Deputy Prime Minister Tanczos Barna, who heads the working group, announced that a support has emerged for the full preservation of the income tax as a source of financing for local public administration, while at the same time reiterating the need for balance in terms of gradually reducing the pressure on the national budget of the balancing system from the value added tax.
