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September 1, 2009

On the Right Side: Taxes OK if they are used well

Radu Cristea is a special Romanian friend from Cluj-Napoca and has been indispensable in the work I am doing there. It would have been almost impossible for me to have accomplished anything without his advice and unselfish assistance.

Radu is a successful entrepreneur and small businessman and has his finger on the pulse of everyday Romanian life.

I asked him to write something for me that reflects his opinion on taxes and public health care in his country. After making massive cuts to his original article, this is what he came up with. I hope you enjoy it.

I'm not upset for paying taxes. I don't have a problem that taxation is so high for small businesses _ even though small- and medium-sized companies are the engine that moves the economy forward.

I mean, after all, we do need strong national revenue. If a company is taxed, it pays a part of its income or profits to the government so the government can pay for public services such as education, health care, military and police.

Paying all these taxes would not bother me at all if the money would go to the right places, where it's needed the most. However, finding out about overpriced acquisitions for government contracts delivered to certain politicians through companies owned by their wives, sons or relatives deeply disturbs me.

Seeing the poor quality of the centralized health care system and the low remuneration that doctors get deeply disturbs me. I see the government wasting money every day like crazy, and this drives me nuts.

Now, as I said, the government collects taxes and then distributes the funds to all public services, including health care. The Romanian health care system has been in existence since 1700, and it has had many an unsung hero since. During the 1828 plague in Bucharest, 21 out of 26 doctors died of plague whilst administering treatment for the disease.

Today, I can frankly say that the health care system is ill, very ill, and will probably die soon unless urgent measures are taken. Despite the high taxation, health care is dangerously underfunded, which causes problems.

Hospitals owe money to medical suppliers and make partial payments to laboratories so they can survive. The Romanian Association of Medical Product Suppliers even threatens to cut deliveries to several hospitals in the country. Despite the suppliers' sympathy for the problems of the Romanian health system, they are ready to turn off the switch.

On a personal level, even though I'm entitled, as a taxpayer, to free medical care, I would still have my wife give birth in a private clinic and gladly pay for that. It's not that the doctors in the state's health care system aren't great professionals. It is just that health care is generally poor by European standards.

Underpaid doctors have the tendency to either accept or even request certain financial benefits from their patients. For example, my friend who is eight-months pregnant has already made an appointment to give birth at a private clinic, but not before checking out a regular, government-funded hospital.

She found that in the state hospital she would need to bring a lot of things _ including aspirin and a piece of cloth that doctors would use to wipe the baby right after birth.

Besides this and the poor look of the hospital, she also found out that she should grease the squeaky wheels of the system by giving 500 Euros to the doctor and another 200 or so to the nurses that would deliver her child into the world.

Why this bribe? So they can take better care of her and the baby.

Now, on the other hand, the fee at the private clinic she is going to is 1,000 Euros. The clinic looks much nicer and has better equipment. The staff is great, and all she needs to bring are just clothes for the newborn baby. She will be paying the private clinic's fee because it's the better choice.

Could you imagine for a second how frustrating this is? I mean, you pay for medical care with your taxes all your life; but when you need to benefit from that money, you find out that you need to pull more money out of your pocket just to be treated normally.

Centralized health care doesn't work. In a private health care system, you have choices you can make on your own money.

When you pay revenue to the government and it decides how the funds are distributed to health care, you have no control over your money. You can't make decisions on how that money is being spent.

Despite my belief that everyone should have access to health care, I do believe that private, independent health care is the best.


Tom Sears is a professor of accounting at Hartwick College in Oneonta. He can be reached at His column appears every other week.