Maria Zenovia Grigore • Mariana Gurau
LESIJ NR. XVIII, VOL. 2/2011
The present work focuses also upon the report „Doing Business 2011”2, realised by the World
Bank (WB) in co-operation with International Financial Corporation (IFC) and upon the study
„Paying taxes 2011”3, realised by WB, IFC and PricewaterhouseCoopers (PwC). This last report
looks at tax systems from the business perspective, because business plays an essential role in
contributing to economic growth and prosperity by employing workers, improving the skills and
knowledge base, buying from local suppliers and providing affordable products that improve
people’s lives. Business also pays and generates many taxes. As well as corporate income tax on
profits, these include employment taxes, social contributions, indirect taxes and property taxes.
Therefore, the impact that tax systems have on business is important. The two reports of WB, IFC
and PwC analyze the facility in paying taxes in 183 economies from world-wide. The indicators
used measures the cost of taxes paid by a standard company, but also the administrative charges
due to accomplishment of fiscal obligations. Both aspects are very important for a company. These
are measured through the identification of three sub-indicators: total tax rate (cost of all paid
taxes), necessary time to accomplish the fiscal obligations (income tax, social security
contributions paid by the employer, property taxes, transfer of properties taxes, dividends tax,
capital income tax, financial transactions tax, wastes collecting taxes, as well as motor vehicle
taxes and road taxes), as well as the number of fiscal payments made by the company during a
1. Tax burden. Factors of influence and consequences
Tax burden shows the level of pressure of taxes or in other words, how much is the fiscal
burden lying heavy on tax payers’ shoulders. The most common way to measure the tax burden of
a country is the overall tax ratio (OTR), i.e. the sum of taxes and social security contributions as a
percentage of gross domestic product (GDP). This indicator reflects the part from revenues created
at the level of real economy that is shifted to the State through the taxes and social contributions.
OTR is influenced by two categories of factors: external and internal.
Through the external ones, we can mention:
- the level of development of the country, given by the GDP value per inhabitant. Usually, the
tax burden is greater in the countries which have a high level of GDP per inhabitant since the
capacity of fiscal contribution of inhabitants is higher in these States.
- the level of taxation from other countries. The fiscal policy of a state has to take into
consideration the fiscal policies of other countries, since a high tax burden can determine a
migration of money and manpower to countries with a lower taxation.
- the level and structure of public expenses. In countries where public expenses for education,
culture, health, social security etc. are greater, the State can pretend higher taxes, since their degree
of reversibility is substantial.
The internal factors which influence the level of taxation are:
- the type of used tax rates (generally progressive or proportional rates). In states where the
progressive rates are most used, the tax burden is higher.
- the methods of valuation and determination of the used tax base. Different methods can
determine an overvaluation or an undervaluation of the taxable product.