site.btaTrade Union, Civic Organizations and Political Parties Start Petition for Lower VAT and Nontaxable Income

Sofia, September 11 (BTA) - The influential Podkrepa Labour Confederation, civic organizations and representatives of political parties Monday called for introduction of a nontaxable income theashold and for lowering the VAT for staple and baby foods, water, basic medicines, school books and other books.

Bulgaria currently charges a flat income tax of 10 per cent for all incomes and a VAT of 20 per cent (with the only exception of hotel services and package tours for which a 7 per cent VAT is applied).

At a news conference at the BTA Press Club in Sofia, "a civic initiative for fair taxes", as the supporters of the campaign call themselves, announced that they start collecting signatures for a petition for the lower VAT and the nontaxable income threshold of 460 leva or higher.

They hope to collect enough signatures to submit the petition to Parliament as the budget for next year is put up for consideration.

Apart from Podkrepa, the initiative is supported by the Bulgarian Anti-Poverty Network, the Bulgarian Solidarity Association, the Collective for Social Interventions, the Autonomous Workers' Syndicate, several political parties (ABV, Movement 21, Bulgarian Left, Green Party), the dVersia magazine, the Baricada portal for news and analyses, and the dokumentalni.com e-zine.

Speaking at the news conference where the petition was unveiled, Podkrepa economic advisor Vanya Grigorova said that the tax system in Bulgaria is distorted and no other country in Europe refuses to provide special tax treatment for the lowest- income brackets. "In Bulgaria, the worst of the tax burden falls on the modest Bulgarian families while businesses and the wealthiest people take advantage of numerous written and unwritten loopholes in the tax laws," she said. She recalled that the nontaxable threshold for people who are paid a minimum wage was scrapped ten years ago but during that time no prosperity was achieved. "Quite the contrary: Eurostat figures show that inequality and poverty have worsened and Bulgaria has the largest population living in dire deprivation."

The petition cites studies showing that the income gap between the poorest and the richest Bulgarians - now 10 per cent of the entire population - has grown to reach 13 times, while the like figure in the EU is 8.5 times and in the czech Republic, Slovakia and Slovenia it is below 6 times."

The supporters of the lower taxes argue that this will cost the public purse between 1.2 and 1.4 billion leva. In August, the government reported a budget surplus of 2.2 billion leva which means that Bulgaria can afford to take these initial steps towards a tax reform, said economist Dimiter Subev.

He added the money that people will save from the lower taxes, will encourage consumption.