They spend hours waiting in line at tax offices.
In March 2014, with support of the World Bank, a Delivery Unit (DU) was set up in the Romanian Prime Minister’s Chancellery. Its mission: Get better results quicker for the PM in four priority areas.
Tax administration was one of them. The PM’s concern was the pain of paying taxes. Offering online services, for the first time, was one of the ways to decrease the cost of compliance. The DU estimated that they could save the taxpayer up to 12 days a year of waiting at the tax office.
The DU’s role was to plan for these improvements together with the Romanian Ministry of Public Finance and the Tax Administration Agency (NAFA). In a Delivery Agreement, the specific targets, metrics, activities, deadlines and responsibilities were spelled out. The DU was to then monitor the progress monthly against an agreed trajectory and help unblock problems in implementation.
In September 2014, the NAFA launched the online taxpayer platform called Private Virtual Space (PVS). It allows taxpayers to file their tax returns, get their tax bills and see their payments. The target was to enroll 30% of the eligible taxpayers by December 2015. Though the DU tracked progress monthly, the enrollment rate was still at 0.6% in June 2015. Clearly, the monitoring on its own did not help.
But taxes are fundamental to governing a country.
Without taxes there would be no law and order, no security, no pensions and no social safety net.
Collecting a sufficient amount of tax revenue to finance public services without distorting the economy or discouraging people from working is a challenge everywhere. In Romania, the challenge is especially difficult as the culture of voluntary compliance has yet to take hold: Romania ranks among the lowest countries in the EU in terms of the tax gap and the amount of revenue raised as a percentage of GDP.
The economy is growing quickly, which has an unfortunate side effect: more opportunities for tax evasion.
Photo: Daniel Kozak, World Bank
The first time I came to Bucharest in 2013 the Bank office offered to arrange a pick up from the airport. Being a seasoned traveler, I declined the offer. I reasoned that I had lived and worked in so many countries I could manage the transfer to the hotel without assistance. I was wrong.
I picked up my luggage to find a local cab outside the airport. A taxi driver offered me a ride. I didn’t negotiate the price upfront seeing that he had a meter in the car.
Twenty minutes later we reached the hotel. The meter read Lei 200 - at the that time about $60. That was over twice the going rate but there was little else I could do. I felt cheated as so many tourists do.
I learned from the experience, accepted offers of help from colleagues and paid more attention to rates going forward.
An electronic kiosk had been installed at the airport. Arriving visitors could now press a button to get an estimated wait time to hail a taxi. I took my ticket. It was a smooth ride.
What made the difference?
The new taxi ordering system is now available on mobile phones mirroring, in many ways, the service provided by Uber. Passengers can rate drivers and increase accountability.
Bucharest has gone from being a difficult place to find an honest cab driver to one of the most convenient.
The change has been driven by incentives and improved technology.