Mugur Isarescu, head of the Romanian National Bank (BNR), yesterday opened his presidential election campaign with a swipe at what he sees as being Romania’s high corporate tax rates.

Isarescu, whose previous bid to become Romanian president (in 2000) split Romania’s centre-right vote and allowed far-right loonster Vadim Tudor to make the second round, told reporters that he was ‘shocked’ when he found out how much his companies had to pay to the state’s budget in the first quarter of this year. ‘I wanted to hang up on the accountant when he told me we had to pay three billion lei,’ Isarescu said. ‘It’s too much.’

Now, leaving aside the fact that Isarescu (head of the National Bank since 1990) still talks in old money almost nine years after Romania chopped four zeroes off of its currency, we find it rather strange that he has chosen now to start talking about Romanian tax rates; after all, they haven’t changed all that much for a number of years. This is why we think that Isarescu is in fact preparing the ground for another presidential bid, running on a pro-business, low tax, straight-talking ticket. Romania’s presidential election takes place in November, and the political right is in serious need of a candidate to challenge prime minister Victor Ponta, who will almost certainly be the PSD/USL’s presidential option.

Alas for Isarescu and his supporters, his reasoning is not entirely sound. Romanian corporate tax rates are amongst the lowest in the EU: indeed, small companies with a turnover of less than €100,000 pay no profit tax at all, instead paying a tax on income (three per cent), while larger companies pay profit tax at 16 per cent regardless of how big their profits are. You can see how this compares with other countries around the world in this KPMG chart. We note that while Bulgaria has lower corporate taxes (10 per cent), Hungary has a higher rate, of 19 per cent. The highest corporate tax rates in the European Union (EU) are in France and Belgium (33.3 and 33.9 per cent).

Where there could be room for improvement is with the tax wedge levied on employment itself (that’s the difference between total labour costs and take-home pay). In order to pay an employee a take-home salary of 1014 lei, a Romanian company needs to spend a total of 1793 lei, representing a tax wedge of 43.44 per cent: the eighth highest in the EU. Once again, that’s lower than Hungary (where the wedge is over 49 per cent) but far higher than Bulgaria (33 per cent). The EU’s highest tax wedge is in Belgium, at a whopping 52 per cent.

There is much that the government could do to make doing business in Romania easier, not least cutting down the absurd amount of accounting paperwork which needs to be done each month or quarter. It should also be easier to be self-employed (at present only a very few professions qualify for self-employed status). The double-tax on dividends (which are subject to both corporate and income tax) could also go. But the general idea that businesses in Romania pay too much in tax is wrong.

Instead, let’s focus on what is done with the money after it is collected. We noticed on the news this morning for example that the intensive care unit in the maternity ward at Brasov’s main hospital has had its funding cut and faces closure. Meantime, the government on Saturday announced that it was handing an extra 700 million lei over to the army.

In the words of the Roy Bailey song: ‘There’s always enough for the war, but there’s never enough for the poor.’