“We'll keep chasing the same mirage.” A well-known tax expert explains in an understandable way what to expect in 2026

The Romanian government has called for an increase in VAT and other taxes, and in 2026 it will go in the same direction. Instead, the authorities missed the target set for reducing the huge budget deficit, the largest in the EU, respectively for reducing inflation. Cornelia Năstase, one of the most respected experts in tax consulting, explains what measures should be taken for the economic recovery.

Fees and taxes will continue to rise in 2026. PHOTO: Pexels

Romania has higher VAT and taxes from this summer, and from 2026 it will have further increases. All this, however, did not solve the problem of the huge deficit, nor that of the huge inflation. In fact, Romania is the European champion in a ranking that no country would want to do, that of the EU member states that are the worst in these essential chapters. In addition, the burdensome measures of the Bolojan Government have hit hard consumption, known as the engine of economic growth in countries like Romania, where industry is almost non-existent.

Economist Cornelia Năstase, expert in tax consulting, believes that the macroeconomic and structural problems of the Romanian economy cannot be solved out of hand with tax increases. Besides, says the expert, a sustainable consolidation does not start with increasing quotas, but with strengthening the mechanisms that widen the base: compliance, functional digitalization, risk controls, predictability. In a post on Facebook, Cornelia Năstase explains where the Bolojan Government is wrong and what would be the solutions that would be required, in Romania.

Government measures have not brought down inflation and the deficit

“The failure of the VAT increase: Those who do not have economists, should hire tax consultants“, is the title of his post. Further, Cornelia Năstase, who is also the founder and manager of one of the largest Romanian companies in the field, goes directly into the subject.

“When the increase in VAT from 19% to 21% (and the merging of the reduced rates into one of 11%) was announced, the argument was simple: the state needs quick money, and VAT is the most convenient tap. The measures came into force on August 1, 2025. However, the reality on the ground did what the economy always does when it is pushed too hard: it reacted. And the official figures show the boomerang. INS confirms that, immediately after the increase, consumption decreased: in August 2025 by approximately 4% compared to August 2024, and in September by another 2% year-on-year. In other words, Romanians paid more in the daily basket, but bought less. VAT receipts did not explode, but began to limp — including decreases in budget revenues compared to the previous month, precisely because the consumption base thinned out.”says the expert.

In his opinion, those who made the decision to increase taxes did not call on the expertise of tax consultants.

“If a tax consultant had been asked when making the decision, this is what he would have said: VAT is an indirect tax with the final incidence predominantly on the consumer. When real incomes are under pressure, when credit is expensive and when inflationary expectations are high, a VAT increase operates as a pro-cyclical impulse: it pushes down consumption just when the economy needs stability in demand. The result can be paradoxical – not because it is mysterious, but because it has been ignored the basic condition: the budget income = quota. Or, if the quota goes down enough, it's the difference between collecting “more per unit”. That's the classic lesson that the decision-makers keep ignoring: when you raise the tax, you've solved the deficit only on paper.”explains Cornelia Năstase.

The costum is decreasing, the Romanians are getting poorer

She also mentions a well-known truth, but which the government did not take into account at all. The VAT increase hits middle and low income citizens. And Romania, according to official Eurostat data, is the country in the European Union with the most poor people.

Cornelia was born. PHOTO: Facebook

“And there is something else important to say here: VAT is a regressive tax. That is, it hits proportionally harder in low- and middle-income earners. The shock isn't just in the statistics, it's in the behavior: postponements, spending cuts, “cut off the list.” And when households curb their consumption, they also curb the economy. That's why I say this: the problem of Romania's taxation is not the level of taxes per se, but the threshold of affordability. You can have low taxes, but if you suddenly increase them in a context of inflation, expensive loans and wages that don't keep up, you reach the same conclusion: people can't afford it anymore. And then the state does not collect more. It collects less, but with more social frustration in the package.” adds Cornelia Năstase.

What would be done

The government would have other solutions, but it seems it prefers to go ahead with increasing taxes. Moreover, starting January 1, housing taxes will increase by 80%, which will deal a severe blow to those on low incomes. Other taxes that will increase from 2026 are those for car owners, and more and more experts say that a further increase in VAT is inevitable in the coming months. Cornelia Năstase is convinced that the solutions lie elsewhere.

“A sustainable consolidation does not start with increasing quotas, but with strengthening the mechanisms that widen the base: compliance, functional digitalization, risk controls, predictability. Only after you have a base that does not evaporate like ice on the grill, you can discuss higher quotas without producing adverse effects. And if we do not change the logical order: collection reform, administrative efficiency, then the discussion of quotas, we will keep running after the same mirage: “more we put a VAT point and it is solved». It is not solved“, points out Cornelia Năstase.