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7 Principles for the Prosperity of Romanians

22.08.2010 · Promo Studies 1, Studies | Nici un comentariu »

1. A minimal state, only fairer and stronger. A state that would work for Romanians

We need to enact a fundamental change of the state, one which would make the government more responsive to the needs of the citizens, particularly in these times of crisis. We need to see a radical change in the way government and society interact.

Principles

State of facts

Solutions

Effects and time span

1. A minimal state, only fairer and stronger. A state that would work for Romanians

Luxuriant bureaucracy, which slows down the economic development

  • Reduced involvement of the government in the economy (reducing the proportion of the GDP represented by public expenses) to approx. 30%
  • Redesigning the administrative apparatus of the country

  • Amplification of economic growth by annual rates of real GDP by 7-8%
  • Reduced corruption and discretionary power of government over the people

A weak state, which tries to do many things but fails to de most of them properly

  • Redefining the relation between state and market and the areas of public involvement

  • Restricting, by Constitution, the fields of public interest

  • Privatising the state-owned real estate

  • Privatising the economic actives

  • Improvement in basic public services left in the administration of the state

  • Rendering the economic structure more flexible

  • Increased credibility of the state

  • Effects are both short-term (2-3 years), but preponderantly long-term

2. Attractive taxes. Taxes for the prosperity of Romanians

The citizen’s pocket takes precedence over the State’s pocket

Currently, Romania plays host to the most luxurious fiscal regime in the whole of EU: nearly 500 taxes and fees. The advantages of the flat tax have been lost in the legislative and fiscal jungle in which investors must struggle.

The medium- and long-term fiscal solution is a flat tax of 10% and 15% VAT. Only thus will we be able to keep up with our neighbours.

Principles

State of facts

Solutions

Effects and time span

2. Attractive taxes. Taxes for the prosperity of Romanians - A fiscal philosophy contrary to the principles of economic development
  • Flat tax of 10% (2 years)
  • Reducing VAT to 15% (3 years);
  • Reducing social contributions by 50% (1 year);
  • Attracting foreign investments;
  • Encouraging capital growth

  • Creating jobs

  • The most luxurious fiscal system in the EU (over 500 taxes)
  • The highest fiscal burden in Eastern Europe
  • Administrative simplification

  • Fiscal simplification (6 months)
  • Competition between the services provided by local authorities

  • Improving power relations between state and citizen

3. Romanians ought to work for their future, not for the State: decentralisation and debureaucratisation

In Romania, bureaucratic procedures make the citizen’s life a living hell, for he no longer works for his own future, but rather for the State. The State in Romania is weak and unfair, because it is overly centralised and hyper-bureaucratised. Administrative simplification and debureaucratisation are indispensable for achieving efficiency and for eliminating the barriers that prevent the citizen from working for his own future. Reducing bureaucracy also means reducing institutionalised corruption, which has made some rich and many poor in utterly unfair manner.

Principles

State of facts

Solutions

Effects and time span

3. Romanians ought to work for their future, not for the State: decentralisation and de-bureaucratisation
  • Bureaucratic centralism and discretionary practices in budget allocations;
  • Institutionalised corruption

  • Administrative decentralisation

  • Financial decentralisation at the level of local administration (1 year)
  • Depoliticising the allocation of public funds in 2-3 years from implementation;
  • Tuning public decisions with the real needs of the citizens

  • Immense costs for fiscal and administrative compliance

  • Reducing bureaucracy in fiscal and regulatory agencies;
  • Creating the ‘unique window’ system, both in fiscal and administrative dealings;
  • Reducing by 50% in the space of 2-3 years of compliance costs incurred by companies;
  • Encouraging enterprise and creating new companies

4. Freedom of choice in education: school in the service of the student

Parents and young people alike bear witness to the current failure of the educational system. We must transform the school from a poorly institution patronised by the Ministry into one in the service of the student and his family – the true beneficiaries of the education system. For the good of our children, we must move on from uniformity and bureaucratic centralism to diversity and competition. It is better to finance students, through educational vouchers, than to finance school bureaucracy. We need true competition between state-sponsored schools, but also between these and private schools.

In those places where the state has not suffocated the educational initiative, the advantages are obvious. An eloquent example is pre-school education, where the dramatic increase in the number of private kindergartens shows better adaptation to the requirements of families.

Principles

State of facts

Solutions

Effects and time span

4. Freedom of choice in education: school in the service of the student!

  • The failure of public education system

  • Legal system which favours the creation of private schools (such as in Denmark or the Netherlands);
  • Simplification of current authorisations and accreditations;
  • The creation within 2-3 years of competition between education providers;
  • Competition between teachers and correlation between salary and educational performance;
- Monopoly and rigidity

  • Bureaucratic Centralism
  • Adapting curricula to the needs of the market;
  • Decentralising public school administration and financing;
  • Introducing fiscal credit and educational vouchers.
- Rapprochement between the school offer and the needs of the local community (1-2 years);

- Encouraging local examples of ‘proper practices’;

- Limiting the involvement of the Ministry of Education and involvement of local economy.

5. Freedom to choose in healthcare: physicians in the service of patients

At the present time, the public healthcare system has failed. Most hospitals have become gardens of death: lacking medicine, medical instruments and enthusiasm from the personnel, they find it impossible to provide quality healthcare services. The damage done by the present system to society as a whole is immense. In the coming years, it will be devastating, unless a profound reform is undertaken now, in direct and bold fashion.

The surge of private health insurance services must represent the basic approach. Privatising hospitals will allow an increase in the quality of services provided, will stimulate accountability in the medical act and will spur the modernisation of the medical instruments available. An eloquent example is that offered by dentistry, which at the current moment is mostly privatised. Competition between the thousands of private clinics answers to the needs of all people, from all walks of life.


Principles

State of facts

Solutions

Effects and time span

5. Freedom to choose in healthcare: physicians in the service of patients

  • Failure of the state-owned healthcare system

  • Stuffy and unrealistic procedures initiated by the Ministry

  • Decisional Centralism, which paralyses local initiatives
  • Discretionary allocation of public funds for modernisation

  • Privatising hospitals

  • Subordination of remaining public hospitals to local authorities

  • Eliminating the current contributions to the public health insurance system

- Healthcare system based on private health insurance and negotiable contributions, besides a compulsory minimum, covering basic medical care

  • Transforming the population from ‘assisted persons’ into ‘decision-making persons’

  • Encouraging competition between state-owned and private providers of healthcare services

  • Stimulating the modernisation of medical infrastructure and instruments
  • Making the healthcare offer more flexible

  • 2 years from general implementation

6. Pension reform – from the humility of the present to the dignity of the future

After contributing for decades to the public pensions fund, today’s pensioners are left at the mercy of the state and of the political class. The solution consists in replacing state pensions with a private one, based on competition and voluntary pension insurance. Only thus will we be able to transform forced solidarity in a real, family-based solidarity.

Principles

State of facts

Solutions

Effects and time span

6. Pension reform – from the humility of the present to the dignity of the future

  • Almost everywhere in the world, public pension systems are confronted with the risk of financial implosion
  • Transition from the principle of ‘inter-generational solidarity’ to that of personal responsibility

  • Encouraging savings and personal responsibility for ‘darker days’

  • Romanian pensioners have always been at the mercy of the politicians

  • Relative impoverishment of the entire category of pensioners

  • Eliminating Pillar I of the pensions system (CAS)
  • Creating a private system of Pension Savings Accounts at the national level (including compulsory contributions of at least 10%)

  • Within 10-15 years, the actives administered by private funds will increase strongly, by up to 40% GDP

  • Obtaining a real mean increase of approximately 10% after 3-4 years of private management

  • Increasing competition and financial discipline on the private insurance market

7. Roads for the future: more and safer roads

Taking advantage of Romania’s position of bridge between East and West, we could hope to achieve development only if we were to possess a functional transportation system. In the field of infrastructure there is only one positive approach which will lead to a long-term positive development: moving on from public financing – taking money from the pockets of the citizen – to a commercial approach, based on attracting private funds, through public-private partnerships. Attracting private capital by leasing infrastructure projects is the only sure way to modernise Romania.


Principles

State of facts

Solutions

Effects and time span

7. Roads for the future: more and safer roads

Old infrastructure

Leasing the road network (Examples: France, Sweden) – 2 years

Improving the quality of roads

Inflated production costs (much above the European average)

Initiating private-public partnerships – 2 years

Attracting capital and accelerating the process of motorway construction

Corruption Reducing the role of the State – 2 years

Cost cuts



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