Fiscal Council: Correcting budget deficit cannot be achieved on expenditure side, tax increases, unavoidable

 President of the Fiscal Council Daniel Daianu said on Tuesday that the budget deficit is "like a gangrene for the body of the Romanian economy and society" and its correction cannot be achieved only on the expenditure side, mentioning that some tax increases cannot be avoided."Any means that can lead to the increase of Romanian state's revenues must be taken into consideration. It is not a miracle solution, such a thing does not exist. The scale of the adjustment makes it impossible to avoid some of the pain. Those who support the thesis that the deficit correction can be achieved only on the expenditure side, are chasing after a hymera, something like this is not possible. (...) I am speaking on the basis of the analysis that we conduct at the Fiscal Council and on the basis of my own judgment. I believe that we cannot avoid increasing the fiscal revenues of the state, so I am not talking about non-fiscal revenues, through some tax increases," said Daianu, at the Palace of Parliament, after meeting with the President of the Senate, Ilie Bolojan.According to Daniel Daianu, the budget deficit is "like a gangrene for the body of the Romanian economy and society"."For years the Romanian society has been relying on the state budget. Well beyond possibilities. When I say that, it doesn't mean that only the public sector is to blame. This is nonsense because the incomes of public sector employees, teachers, doctors, we are not only talking about civil servants, these revenues are spent in the economy and are seen in the receipts of businesses. It's a gangrene and it can be fought so as to be extirpated. Substantially increasing tax revenues only through much better collection is not possible. What I told [Senate] president Bolojan is what I have been saying publicly for a long time," explained Daniel Daianu.According to the president of the Fiscal Council, 30 billion RON cannot be obtained from expenditure cuts."I don't believe something like that. If you look at the structure of the public budget, you realise that salaries and pensions account for most of it by far. First of all, you cannot cut salaries and pensions (...). You can indeed cut spending on goods and services. But you know very well that there are parts of the budgetary system that are struggling because they don't have enough, for example hospitals, even schools, what do we do? We cut more from there? We have interest expenses, which do not depend on us. We can't reduce spending on state interests. Interest rates depend on what happens on the international financial markets. If we don't have a credible plan through the impact on tax revenues, I'm sorry to have to say this, there's nothing we can do, because we all have to accept a dramatic reality - that we cannot get out of the predicament without giving up some revenues when it comes to people, revenues when it comes to businesses. There is no other way," Daianu explained.Asked about the instruments through which the new Government could eliminate the deficit problem, Daianu mentioned that his vision is recorded in the documents of the Fiscal Council, according to which the deficit correction cannot be achieved only on the expenditure side. He also maintained that the corruption and theft that exist in the state apparatus are spread everywhere, not just a certain section.As for turning to the IMF, the Fiscal Council president deemed it would be more natural "to have a package, even if it is painful in its consequences, but saving Romania's financial unity, which is what is at stake now."