This paper tries to evaluate the situation of the fiscal revenues in Romania in the context of economic and financial crisis, because the fiscal revenues are the major source of financing the public expenditure. The evolution of the level of fiscal revenufiscal revenues, budget deficit, public debt

Achim Monica Violeta

Cuceu Ionut

Inceu Adrian

Mara Eugenia Ramona

English

Research Papers in Economics

252 
 
THE IMPACT OF ECONOMIC CRISIS ON THE FISCAL REVENUES  
 
Mara Eugenia Ramona 
Babeş-Bolyai  University,  Faculty  of  Economics  and  Business  Administration,  58-60  Teodor 
Mihali Street, 400591, Cluj-Napoca, ramonanandra@yahoo.com, tel. 0745072553  
Inceu Adrian 
Babeş-Bolyai  University,  Faculty  of  Economics  and  Business  Administration,  58-60  Teodor 
Mihali Street, 400591, Cluj-Napoca, inceuadrian@yahoo.com, tel. 0742275659  
Cuceu Ionu   
Babeş-Bolyai  University,  Faculty  of  Economics  and  Business  Administration,  58-60  Teodor 
Mihali Street, 400591, Cluj-Napoca, cuceuionut@yahoo.com, tel. 0742275659  
Achim Monica Violeta 
Babeş-Bolyai  University,  Faculty  of  Economics  and  Business  Administration,  58-60  Teodor 
Mihali Street, 400591, Cluj-Napoca, monicaachim@yahoo.com, tel. 0741194473 
 
Abstract 
This paper tries to evaluate the situation of the fiscal revenues in Romania in the context of economic and 
financial crisis, because the fiscal revenues are the major source of financing the public expenditure. The 
evolution of the level of fiscal revenue is very important because maintain the budget equilibrium. The 
article reveals the major trends of the fiscal revenues after EU enlargement and in the actual context of 
economic crisis and the impact on the budget deficit and the public debt. The state intervention in revive of 
the economy has to be financed through the budget, and this means a higher budget deficit. The proper 
solution in this condition for assuring the financial stability of the economy it was an external borrow from 
IMF. 
   
Key words: fiscal revenues, budget deficit, public debt  
 
The article’s JEL code: H2, H62, H63  
 
Introduction 
The fiscal revenues are the most important source of financing the public expenditure in any 
economy through the public budget. The level of the fiscal revenues is determined by the fiscal 
policy adopted by the government, but also the evolution of the economy.  
Despite a sharp drop in the last quarter of the year, GDP growth accelerated to 7.1% in 2008, 
from  6.2%  in  2007.  In  the  first  three  quarters,  domestic  demand  for  both  consumption  and 
investment boomed at double digit rates, fuelled by strong wage increases and a rapid expansion 
of credit. Net exports continued to record a negative contribution to GDP growth.
175 
In Romania, at the end of 2008 the effects of economic crisis are revealed by the evolution of the 
fiscal revenues: starting October, budget revenues decrease by 10% each month, according with 
HotNews.  
The Romanian budget deficit for 2008 registered the higher value from the last years as a result 
of a lax fiscal policy and lower than expected revenues. The lax fiscal policy it was caused by the 
tax competition in which Romania it was engaged starting with 2005 with the introduction of the 
flat tax. But the lower fiscal revenues are a direct consequence of the economic crisis, because 
many companies which in 2008 obtained profits and paid taxes, in 2009 are closed. In these 
conditions the budget revenues are not enough for financing the public expenditure. For reducing 
the budget deficit the government planned to reduce some expenditure and in the same time to 
increase some taxes and even introduce a new one: the minimum income tax for companies. 
                                                       
175 Economic Forecast, Spring 2009, European Commission, Directorate-General for Economic and Financial Affairs, 
3/2009 253 
 
Austere fiscal measures planned as a result for 2009 will impact on wages and social security, 
affecting consumer spending and economic growth. 
The long term budget revenue analysis 
The study starts with a short analysis of the evolution of the budget revenues and budget deficit 
in the recent years. The budget deficit beginning with 2000 year is continuously decreasing until 
2005, when start to increase, but it was below Stability and Growth Pact requirement of 3% of 
GDP, as can be see from the next figure. 
 
Source: Eurostat 
 
In 2008 the level of budget deficit is more than double comparative with the level of 2007, and 
this means 5.4% of GDP. 
This was mainly due to substantially higher-than-planned current spending, notably in public 
wages and social transfers. In addition, overly optimistic revenue projections did not materialize 
and a sudden drop in revenue collection in the last two months of the year owing to the economic 
slowdown added to the worse than expected outcome.  
 
 
Source: Eurostat 
 
The evolution of the total tax revenue in the last ten years reveals that starting with 2005 we have 
an  increasing  of  the  tax  receipt  until  in  2008.  Because  in  this  period  the  fiscal  policy  was 
unchanged the only cause for this decreasing remains the economic crisis, which affect not only 
companies but also individuals, who loss their jobs, and in this condition the income tax and 
consumption tax are decreasing. 
Budget deficit
-4.5
-3.2
-4.5 -4.4
-3.5
-2
-1.5 -1.2 -1.2
-2.2 -2.5
-5.4
-8000.0
-7000.0
-6000.0
-5000.0
-4000.0
-3000.0
-2000.0
-1000.0
0.0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
m
i
l
 
E
u
r
o
-6
-5
-4
-3
-2
-1
0
%
 
o
f
 
G
D
P
Budget deficit mil Euro Budget deficit % of GDP
Tax revenue as % of GDP
28
29
30
31
32
33
34
35
36
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
%254 
 
The effects of the economic crisis on the tax revenue 
The effects of the financial and economic crisis became obviously in our country starting with the 
last quarter of 2008, when the economic growth it was only by 2.9% comparative with the entire 
year, when the economic growth it was 7.1%. In the last quarter of 2008 comparative with the 
same quarter of 2007, can be observed the follow trends (in the real terms)
176: 
- the growth of the gross value added with only 3.5%; 
- decreasing of the total consumption with 2.8%; 
- increasing of the gross fixed capital formation with only 2.8%; 
- increasing of the exports with 1.6 %; 
- decreasing the imports with 10.2%. 
In  2008  the  general  budget  revenues  decreasing  from  one  quarter  to  another,  though  these 
reductions  were  not  so  significant.  Budget  revenues  decrease  in  the  last  quarter  with  2.6% 
comparative with the 3
rd quarter of the same year.
177. 
 
The evolution of budget revenues in 2008 quarterly 
 
Source: Raport privind situa ia macroeconomică a României pentru 
 anul 2009 şi proiec ia acesteia pe anii 2010-2012 
 
In 2008, comparative with 2007, the public budget revenues have registered an increasing in 
nominal terms, with almost 29%. The most important increasing have been for: corporate tax 
with 23.6%, income tax with 27.8%, VAT with 30.8%, excises with 8.7% and social contribution 
with 24.7%. These evolutions of tax receipts have been take place in the conditions in which 
GDP increased with 7.1% in the real terms and consumption with 8%
178. 
In 2009 when the economic crisis conditions becoming worse, as a consequence of decreasing 
the activity in many sectors of the economy, the state revenues were affected. The decreasing 
trend of tax revenue is obviously in the first quarter of 2009. 
   
                                                       
176 National Institute of  Statistics, Press statement no. 41/4 march 2009   
177 Raport privind situa ia macroeconomică a României pentru anul 2009 şi proiec ia acesteia pe anii 2010-2012 
178 National Institute of  Statistics, Press statement no. 41/4 March 2009   
39,000
39,500
40,000
40,500
41,000
41,500
42,000
1st quarter 2nd quarter 3rd quarter 4th quarter
m
i
l
 
L
e
i255 
 
 
The major tax receipts realized in 2007 and 2008 
 
Source: Public Finance Minister 
 
Budget revenues declined with 7.06% in the first quarter of 2009, (from 32.65 lei) compared to 
Q1  2008  (35.13  billion  lei),  according  to  Romania’s  National  Fiscal  Administration  Agency 
(ANAF)
 179.  
Concerning  the  major  categories  of  taxes  realized  by  ANAF  in  the  1st  quarter  of  2009 
comparative with the same period of 2008 it can be observed the follow trends (in the nominal 
terms): 
- decreasing of the corporate tax receipts with 13.7% (because for many companies thee profits 
are lower); 
- increasing the income tax receipts with 21.2%; 
- decreasing of VAT receipts with 16.8% (this is a consequence of decreasing consumption); 
- increasing excises receipts with 6.2% (because the excise rates were increased starting with 
2009); 
- social contribution receipts are higher with 8.8%.  
 
The evolution of main categories of taxes 
 
Source: ANAF  
 
Conclusions 
For the next period tax revenue has too be higher due to introduction of lump-sum tax and 
increasing the social contribution rate. These measures are not enough for assuring the budget 
                                                       
179 Romania’s National Fiscal Administration Agency, Press statement no. 109 0266/08.04.2009  
0
10000
20000
30000
40000
50000
60000
Corporate tax Income tax VAT Excises Social
Contribution
m
i
l
 
l
e
i
2007 2008
0
2000
4000
6000
8000
10000
12000
14000
16000
Corporate
tax
Income tax VAT Excises Social
Contribution
m
i
l
 
l
e
i
1st quarter 2008 1st quarter 2009256 
 
equilibrium and the capacity of the budget to sustain all the public expenditures in the context 
that the effects of economic crisis are more pregnant. Much more the state intervention in revive 
of the economy has to be financed through the budget, and this means a higher budget deficit. 
The proper solution in this condition for assuring the financial stability of the economy it was an 
external borrow from IMF.  
The deficit is projected to decline to 5.1% of GDP in 2009. The 2009 budget adopted in February 
2009,  contains  several  measures  to  lower  the  deficit,  including  a  recruitment  freeze  and  the 
reduction of various bonuses in the public sector, cuts in expenditure for goods and services and 
subsidies,  limiting  pension  increases  to  inflation  and  a  bringing  forward  of  the  schedule  to 
increase excise taxes. On the revenue side, are taken some measures like eliminating certain tax 
deductions and   allowances (in particular on company cars and depreciation of revalued assets). 
On the other hand, the government plans a substantial increase in public investment in 2009 
compared with 2008. These measures are reflected in a budget rectification approved by the 
government in April 2009. 
 
References: 
1. Romania’s National Fiscal Administration Agency, Press statement no. 109 0266/08.04.2009; 
Press statement no. 943 133/09.04.2008 
2. National Institute of  Statistics, Press statement no. 41/4 March 
3. Economic Forecast, Spring 2009, European Commission, Directorate-General for Economic 
and Financial Affairs, 3/2009 
4. Raport privind situa ia macroeconomică a României pentru anul 2009 şi proiec ia acesteia pe 
anii 2010-2012 
 
Annex 1. Budget Revenue in 2008, quarterly (mil. lei) 
  Total 2008  Q1  Q2  Q3  Q4 
Revenue  164.466  41.584  41.454  41.252  40.176 
Change of the 
previously quarter 
     
-0,3% 
 
-0,5% 
 
-2,6% 
Source: Raport privind situa ia macroeconomică a României pentru anul 2009 
şi proiec ia acesteia pe anii 2010-2012. 
 
Annex 2. The major tax receipts realized in 2007 and 2008 (mil. lei) 
  2007  2008 
Corporate tax  10558,3  13045,9 
Income tax  14374,9  18365,7 
VAT  31243,2  40875,1 
Excises  12511,8  13599,4 
Social Contribution  38843,0  48419,8 
Source: Public Finance Minister 
 
Annex 3 The evolution of main categories of taxes (mil. lei) 
  Q1 2008  Q1 2009 
Corporate tax  2.461,99  2.125,63 
Income tax  4.119,11  4.993,91 
VAT  10.264,16  8.535,52 
Excises  3.018,21  3.206,29 
Social Contribution  12.503,50  13.600,02 
Source: Romania’s National Fiscal Administration Agency, 257 
 
Press statement no. 109 0266/08.04.2009; 
Press statement no. 943 133/09.04.2008   

Raport privind situa ia macroeconomică a României pentru anul

Romania’s National Fiscal Administration Agency, Press statement no. 109 0266/08.04.2009; Press statement no.

Spring

THE IMPACT OF ECONOMIC CRISIS ON THE FISCAL REVENUES

http://steconomice.uoradea.ro/anale/volume/2009/v3-finances-banks-and-accountancy/42.pdf

THE IMPACT OF ECONOMIC CRISIS ON THE FISCAL REVENUES

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