Tax Incidence and the Structure of Taxation in Romania

Abstract

Taxes are compulsory contributions to government finances for which taxpayers are unable to claim direct benefits. An underlying principle of most tax systems is equity. This may be achieved by applying either the benefit principle or the ability-to-pay principle. The effective incidence of a tax refers to the final resting place of the tax after all agents have adjusted their economic behaviour in respect of hours of work, spending, saving, and investment. The imposition of a tax may result in a misallocation of resources.