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Economic analyst: Romania should cut taxes to have growth

Romania should cut taxes on capital and labor force in order to have economic growth on medium and long term, as nothing can be done by means of measures of monetary policy, economic analyst Florin Catu says.

'In order to grow on medium and long term you need investments. The only way of doing it is by reducing taxes for the production factor. By taxing capital you cannot go further. When you need economic growth you need investments which do not come from capital,' said Catu at Romanian Financial Forum, an even organized by Mediafax and BNR, wall-street.ro informs.

He showed that in a crisis period domestic demand should be stimulated, an objective which can be reached by promoting certain monetary and fiscal policies. 'Monetary policy cannot do anything in Romania. We talk about reducing interest rates to zero, even by injecting liquidities in the system, but that is very slow, according to a BNR research. The transfer is made to the financial banking system. Monetary policy can do nothing but it can keep inflation low,' Catu explained.

He added that in Romania the channel of expectations is very strong and any tendency or any aggressive relaxation of monetary policy can have repercussions on inflation.As for the fiscal policy, Catu says that consumption stimulation can be made by increasing expenses or curbing taxes, including on labour force.

On the other hand Catu showed that world economy needs a new approach, considering tat measure adopted until now were not successful. 'Since 2007 the US and England reduced their interest rates, increased liquidity, the government is helping but with no result. What can we do? We can use solutions for other problems. We are dealing with structural problems, there are economists working with this theory even in EU. It seems that there is a need of and efficient, versatile and adaptable economic system,' Catu added.

In this respect he said that in the last 30 years there had been 97 crises of the banking system and 176 monetary crises.'Regulations did not function, systems could have bee efficient but not adaptable. We need a new approach. It is a matter of system survival, we have reached that very difficult point in which we should know whether the system can survive, Catu said.

In his opinion, in the last 30 years the state has succeeded in becoming very adaptable, versatile but also very inefficient, while the private system is very efficient but fragile.

Sursa: http://www.actmedia.eu

Tags: economic system monetary policy growth romania should taxes bnr

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