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$,"e .#""+#r/s o% # 0ood  sys&e+ C"e#r *2r*ose Co.ere'& 3$ 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' #&$o' #'d e!o'o+$! 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&#" es 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&$o' o% &.e -&o-?DP r#&$o To&#" es 7$'!") SSC9 #s # *er!e'� e o% ?DP (88 : (88 D (88 7 (88 E (88 8 2<< < 2<< ( 2<< 2 2<< > 2<< B 2<< : 2<< D 2<< 7 2<< E 2<<8 C;e!. Re*2,"$! 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' -&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 $'%"2e'!e o% -&o-?DP r#&$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' -&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.$* ,e&wee' -&o-?DP r#&$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 $'%"2e'!e o% -&o-?DP r#&$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#&$o o' -&o-?DP r#&$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 -&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 )**,-)*+/.