Bogdan Glăvan
Economics professor, author of the site logec.ro

I guess you have heard the argument: the Romanian state is poor, therefore it does not have the means for financing public services of good quality. A few days ago Ionut Dumitru restated this idea, showing that Romania scores among the last in the European Union regarding the amount of money collected from taxes.

We have repeatedly criticized this view with arguments and empirical examples, e.g. here, here or here. But many people believe this divergence of views is only a matter of ideology. Those who oppose increasing tax revenues (and who support lowering taxes) do it because they are liberals, “right-wing extremists” or something like that. Today I want to insist on the fact that this is not the case and that opposition to the idea of increasing tax collection is simply logical and natural, and it does not spring from a partisan doctrine.

Let’s see, is it true that if the state is poor then it cannot provide quality service? In brief, no. Indeed, a poor country cannot offer too many public services or social assistance to a great extent, but that does not mean that it cannot provide quality. Let’s make a comparison. Is it true that a poor man has to be dirty as well? Of course not. Indeed, a poor man cannot afford expensive clothes, but that does not mean that his house is dirty or that he does not take care of his looks. Poverty does not equal indecency. I am convinced that each of you know people with low pensions and salaries who still provide an example of civilization.

What are the implications of this discovery to the problem we are discussing? The fact that a state cannot raise enough money to the budget is not synonymous with a state that makes little of the money it collects. Yes, a poor country can build little or no highways; but it may be capable of building a network of express roads, for helping increased travel rates and for bringing Romania out from the Middle Ages to the twentieth even twenty first century. Of course, I am being generous when a I said this: in fact, in Romania, we could have actually built these highways with the amount of money allocated to infrastructure. We do not have them because the money have vanished (have been stolen ?!), only from Bechtel the damage is EUR 500 million worth. We complain that we do not have roads, but how many times have we paved the existing ones in winter or under rain? How many atomic curb-stones have we built? Let us refer to another area: health. Yes, a poor country cannot afford modern hospitals and wages for doctors as in France, but we have built almost nothing in the past 25 years, even more, we have closed many hospitals and the remaining became hotbeds for infection. Have you forgotten about Hexi Pharma? Does this happen in Germany as well?! Is it because they are rich and they do not need stealing?! Or let’s talk about education. Yes, a poor country cannot invest too much in schools. But it is well known that the price of education has decreased substantially due to the technological revolution, so it is a no brainer that it is no longer necessary to spend the same amount as 25 years ago to reach a similar level of education. It is a well-known fact that education is still a socialist system (99% of schools are state owned) and therefore produce many throw-outs. Having a poor country does not mean that we must have a politicized education.

A poor country does not necessarily have to be poorly administered, just as a poor household is not automatically a dirty one. So it is simply irrational to say that we have unpaved roads, bad schools and infected hospitals because we did not raise enough money in taxes. Yes, it is true that our state is poor, but as poor as it is, it can still be administered with a minimal decency in order to provide quality services. What is the reason for Bucharest to have better paved streets than New York, while the road connecting Brasov to Bran – where we have the highest tourism affluence in Romania – looks like those in Africa? There is no reason for the dropout rate to grow astronomically, and still in the end half of the students to not pass the Baccalaureate exam. Is it because we do not have money for tablets, projectors, or maybe because we change textbooks like socks?

Yes, the Romanian state has a problem with money. But it has an infinitely greater problem with the incentive system, with poorly administered institutions, with monopolistic laws and tribal practices. Yes, a poor man does not dress in Prada; but that does not mean he has to steal or commit abuse every day.

You know what? Our state collects so little money precisely because it is so abusive. Precisely because it has stupid taxes. Precisely because it treats its citizens like they are slaves. We should report this situation with every opportunity. The Romanian state has demonstrated such a low governance quality in the last quarter century that the idea of increasing tax collection is not only wrong, but is an idea that can only bury Romania for good.

This article was first published on the website www.logec.ro