1000 lv-free, 20% tax for the rich

BGN 1000 tax-free minimum and 20 percent tax on the rich. Propose drastic reform economists in a report prepared at the behest of President Georgi Parvanov.

Days after skirmishes with the Prime Minister’s energy Borisov president urged the new government to adopt urgent anti-crisis plan. Furthermore, he criticized the cabinet „Stanishev for waste, newspaper reports Trud quoted by BGNES. A year after the crisis Bulgaria still has no economic plan not only to remove the country from recession, but also to ensure development, said the report, cooked mainly by experts from the Institute of Economic Sciences – Assoc Prof. Mitko Dimitrov, Prof. Garabed Minasian, Prof. Dr. Stoyan Alexandrov and others.
The foreword begins with heavy criticism for Cabinet Stanishev: first experts warned of the crisis, then businesses and citizens felt it, and the government finally admitted it. Delayed reaction is affect the effectiveness of the measures. The most powerful examples are unsound spending the budget surplus and shortfalls will solve problems for which was limited access to EU funds. Negative impacts and choices when unjustified government action were subject to election campaigning. Colossal cost-proposed tax reform economic team, drawn presidential report. With the call „Time for new strategy,“ points out that the current approach based on low taxes as a primary tool for attracting foreign investment, is exhausted.
And makes an appeal to the new government to urgently adopt a new program to exit from the crisis. In times of recession, when economic agents seek to accumulate reserves, further reducing taxes and insurance in order to stimulate domestic demand is less effective. More efficient is the generation of net demand by fiscal deficits. Is needed and change the tax policy: In a crisis, all countries with developed market economy, enhance progressivity of their tax systems to distribute more evenly the burden of cuts in production and income. This is especially characteristic of the United States and Britain. May be offered the following indicative levels of taxation in which the total income tax does not increase: 1. Zero rate for monthly income up to 1000 EUR 2. 10% tax on income from 1000 to 3000 BGN 3. 20% tax on incomes of over 3000 EUR reduction of VAT on goods of first necessity and complete elimination of taxes on medicines. Creation of unified information system of taxation, the abolition of VAT fraud and other forms of fraud and tax evasion. This would increase revenues by 20-30% and is an alternative to cut costs.
Should consider removing the limit on pension and health insurance. There are views to reduce pension contributions. Estimates of expectation of this effect, however, are unrealistic.
It is proposed that the recovery of tax on large inheritances over 1 million tax of 25%. The aim is to avoid increasing social stratification in the country.
Radically changed economic situation requires a new approach to cost of revenue. Fiscal expenditure must give a positive impulse to domestic demand and also to facilitate structural adjustment of the economy. For this purpose, the costs should be to:

– Development and modernization of infrastructure;
– Saving and improving energy security;
– Development of information technology;
– Education, training, research;
– Supporting small and medium sector;
– Supporting the second and third pillar pension system by establishing a state guarantee fund;
– Program for financial support of the citizens of the difficulties with the repayment mortgage (residential) loans.
Prevailing in the country are expected to return to the previous pattern of growth – with low taxation, a crucial role of foreign investment and increasingly lower part of the state in the redistribution of GDP. But those expectations are contrary to global trends. The world is formed with a new model of strategic growth state regulatory functions, the experts conclude.

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Finance