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WB:Romania with the highest rate of social contributions in the region, is behind with collection
Romania has the highest rate of social contributions paid by employees and employers in the region, of 55% out of the salary, which could favour the black market, with negative effect on the collected income, according to a report of the World Bank (BM).
The total rate of social contribution for pension, unemployment and healthcare – varies in the economies in transition in Central and Eastern Europe from 3% in Armenia to 55% in Romania, with levels of approximately 30% in Russia, 31% in Bulgaria, 40% in Poland, 44% in Hungary, 45% in the Czech Republic or 49% in Slovenia, says a report published on Friday by the international financial institution.
“The high rates of contributions could induce reactions in the work offers, including the change of work to the black market, which could affect the income negatively’ the report says.At the same time, while Romania has the highest rate in the region, the collected income to the budget from these contributions is only 9% of the GDP with a percentage point over the average of the region, against 11% in Poland, approximately 12% in Hungary and Slovenia and 15% in the Czech Republic.
“The yield of income drops when the rates of contributions surpass a certain level” the World Bank says.
Romania has one of the most developed underground economies in the EU representing approximately 30% of the GDP.
The data were recorded at the level of 2011.