Romania’s tax system increases poverty especially for rural households and for families with children, as direct cash transfers to poor households are not large enough to compensate them for the burden of indirect taxes, according to a recent World Bank study.

The results of the study, called “The Distributional Impact of Taxes and Social Spending in Romania”, suggest that the combined effect of taxes and social spending in Romania help to reduce inequality, although less so than in other EU countries.

“However, the combination of direct and indirect taxes and transfers leads to an increase in poverty, as direct cash transfers to poor households are not large enough to compensate them for the burden of indirect taxes. This is... Read More