Rethink the entire labour market taxation system, including the unified tax rate, World Bank official says

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The Government should rethink the entire social protection system in Romania, because the younger generation does not find any kind of protection in the current mechanism, whereas the authorities should consider giving up the unified tax rate in favour of a progressive system, World Bank Chief Economist for Europe and Central Asia, Hans Timmer, has said on Friday during a press conference in Bucharest.

The World Bank representative said that politicians lose the votes of the younger generation because the social protection systems are no longer working, so that the countries should rethink the social systems and the regulations on the labour market, so that those advantaged are not only the ones with permanent jobs, reports.

Timmer said the labour market has evolved along with technology and the young people do not have classic permanent jobs, from where to retire.

We do not advance specific recommendations, but the governments and the society should rethink the current regulations on the labour market, make them more flexible in order to have the society prepared for what is coming. One cannot keep the regulations of the older economy, the World Bank representative said.

He approached the issue of the unified tax rate, adopted by most of the Eastern European countries, saying it should be analyzed if the system if still running.

Our advice is to rethink the entire taxation system on the labour market, in coordination with other states in the region, not to operate just small changes. We cannot tell you which solution to choose, but everything should be analyzed, including the unified tax rate and the option to implement a progressive taxation system, meaning that those with higher revenues pay more, Timmer said.

The WB Chief Economist for Europe and Central Asia said that Europeans want equality and security, but not only those with permanent jobs. It is not clear what solutions are best, but a neutral system must be envisaged, capable to support everyone.

Hans Timmer said the elderly go to the polling stations while the young people do not vote or leave the country. The choices of the older generation are different, for example they care less about the environment and about what matters to the younger generation. The politicians should start thinking farther than the benefits for the elderly, because we want the young people to remain in the country. The older generation needs the younger generation to take of it. We need to train the society for the new technology, this is more important than satisfying the people who still live in the older economy.  The current pension and insurance systems are nor working anymore for the new economy, and the younger generation ask why they should get involved in such a system, he said.

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