site.btaInfluential Trade Union Wants Tax System Revised to Become Fairer

September 25 (BTA) - The influential Confederation of Independent Trade Unions in Bulgaria (CITUB) Friday called for changes in the tax system to make it feel fair to more people with jobs. Addressing a forum organized by the trade union, its President, Plamen Dimitrov, said it was the lack of a sense of fairness that was the root cause of the current public discontent.

The trade union wants a tax-free minimum set at the level of the minimum wage; 15 per cent income tax on individuals and companies (up from 20 per cent now); and 15 per cent VAT (down from 20 per cent).

CITUB believe that Bulgaria's tax system as it is now increases inequality. The Gini coefficient, which measures income inequality, has topped 40 per cent and is the highest in the EU. The gap between the incomes of the richest and the poorest Bulgarians is over eight times. The richest 5 per cent of Bulgarians concentrate 23 billion leva, while the middle class is becoming increasingly impoverished, said Dimitrov.

The trade union has calculated that if its key proposals are accepted, the Exchequer will lose about 4.67 billion leva, but it will be possible to generate about 4 billion leva from the introduction of additional taxes to offset the expected losses. Thus the net negative effect on the national budget will be about 600 million leva.

If accepted, the proposed changes in direct taxes will leave people earning a monthly wage of 1,000 leva with an extra 652 leva a year.

As to indirect taxes, the proposed lower VAT will cut expenses by 334 leva a year, bringing the total increase in disposable income to 986 leva a year, which could be considered a 13th wage.

"For a household of two who earn 1,000 leva a month each, the disposable income will increase by 1,972 leva a year," the union experts say.

CITUB argue that all earners of up to 2,500 leva a month would benefit from the change in direct taxes. Although income tax will rise from 10 per cent to 15 per cent, the disposable income will increase due to the introduction of a tax-free minimum.

Higher-income groups will also see a positive effect: if one earns 3,000 leva a month, the annual tax increase will be 382 leva but the disposable income will go up by at least 900 leva due to the lower indirect taxes. CITUB puts the number of working Bulgarians who earn over 3,000 leva a month at about 100,000. NV/DD
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