site.btaGERB Abandons Idea about Additional 2% Tax on Incomes

GERB Abandons Idea about Additional 2% Tax on Incomes

Sofia, September 16 (BTA) - The proposal of the Finance Ministry to authorize municipalities to charge an additional two per cent tax on people incomes will not be considered by the Council of Ministers, GERB Floor Leader Tsvetan Tsvetanov said in Parliament's lobbies.

It transpired earlier this week that the Finance Ministry has put up for public discussion amendments to a law, which allows municipal councils the right to vote on additional income tax between 0 and 2 per cent in addition to the flat tax of 10 per cent which is now charged on individual incomes. The new tax will be collected by the NRA and will be transferred to the respective municipal budget. The news media commented that mayors are very much unlikely to take advantage of the new tax opportunity this year - with local elections due on October 25 - but after that they will probably be tempted by the opportunity for fresh resources.

On Tuesday, GERB had a regular meeting with the partner-parties, which support the Cabinet, Tsvetanov explained. Earlier on Wednesday, the idea was declared as unacceptable by Reformist Bloc Co-Floor Leader Radan Kanev. On Tuesday, the IMRO party which is part of the Patriotic Front also declared itself against the proposed amendments.

The Reformist Bloc (RB) does not approve the idea of the Finance Ministry for authorizing municipalities to charge additional two per cent tax on citizens' incomes, RB Co-Chair Radan Kanev told journalists in Parliament's lobbies on Wednesday. In every country, the Government is naturally driven to charging more taxes. "I think that the group of GERB, the Patriotic Front and RB is opposed to certain more radical ideas and to the very idea of an increase of taxes," Kanev said.

However, discussions on the other proposed legislative changes continue, said Tsvetanov. According to National Assembly Budget Committee Chair Menda Stoyanova, the tax threshold for goods for ex-officio use, should be lifted and companies, registered under VAT, should inform the National Revenue Agency, if they can be used for personal needs. Stoyanova explained that it has become a frequent practice for companies to buy vehicles with over five seats in order to use tax credits and then use tax credits for their maintenance as well.

The opposition Bulgarian Socialist Party (BSP) also opposed the idea for the two per cent charge describing it as ridiculous and unacceptable. "We are against experiments in Bulgaria with unclear outcome for the Government and a grave macro and microeconomic effect," BSP-Left Bulgaria MP Roumen Gechev told journalists in Parliament. MP Kornelia Ninova said that the draft legislative changes would widen the regional differences between municipalities and cause chaos in the administration of the tax because companies and people will start moving to municipalities, which do not charge this tax. According to Ninova, this has been meant as an instrument of political influence: the Government will give a state subsidy to municipalities, which are governed by mayors, nominated by the parties represented in it, while opposition mayors will be forced to find other sources of financing.