site.btaMedia Review: November 14

The topics of election irregularities and proposed tax increases dominate Tuesday's news media.

POLITICS

Trud’s front-page story presents the findings of a report by Information Services and an analysis by the Central Election Commission (CEC) about discrepancies in election documents. According to CEC, there are 318 differences between the protocols of municipal election commissions for municipality mayors, and Information Services found 1,120 differences in the number of protocols of constituent election commissions. That means that one in five protocols (or 19.71% of all protocols) for municipality mayor contains discrepancies. The situation is worse with protocols for borough mayors, where 28.79% of protocols contain discrepancies. Sixty municipal election commissions were found to have reported data different than what the Central Election Commission found in the protocols after secondary processing. According to Emil Voykov of the CEC, the discrepancies found are mainly technical ones with no impact on the election results.

On Bulgarian National Television’s (BNT) morning show, former caretaker justice minister Krum Zarkov talked about the local elections, arguing that the Government’s role in their organization was almost none and the organization was very poor. There was a precedent at these elections: not only did the legislator combine two ways of voting (by paper ballots and machines), but the political forces and the responsible institutions through joint efforts made it so that people had to vote in one way in the first round and in other way, in the runoffs.  Given that the CEC comprises representatives of every parliamentary formation, it is quite strange that the Council of Ministers transfers the responsibility for the election problems to the CEC or the State Agency for National Security, instead of looking in its own yard or at the parties that lied to the Cabinet, Zarkov said. He also commented on the justice reform and the draft constitutional amendments.

On Bulgarian National Radio, Ivan Bregov of the Institute for Market Economics’ legal programme talks about the draft constitutional amendments tabled by the Cabinet before the local elections. According to him, the procedure for the revisions’ adoption will be slow, and which texts will generate strong political will should become clear between the bill’s first and second reading. “If the fast track is followed, later they might say, ‘We had political will but the Constitutional Court stopped us.’” According to Bregov, that could actually be a valuable outcome, because someone can wash their hands with the Constitutional Court, as has happened before. 

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On bTV’s morning show, Sofia Municipal Councilor Vili Lilkov (KOD) commented on Monday’s fist sitting of the Sofia Municipal Council, which failed to elect a chairperson, making the start of its work impossible. According to Lilkov, the chairperson can be elected only after negotiations between the main political forces on the Council, during which the election campaign clashes should be forgotten. The issue with Sofia can be tied to the Government and its future, he argued. He called on Continue the Change-Democratic Bulgaria, GERB, and the Bulgarian Socialist Party as the main political players to sit on the negotiation table.

On BNT’s morning show, Sofia Municipal Councilor Boris Bonev of Continue the Change-Democratic Bulgaria-Save Sofia commented that he is not dead set on heading the Sofia Municipal Council but has the full support of his group. This is a position that should be in extremely good synchronicity with the Mayor of Sofia. According to his group, the mayor and the Municipal Council head should be from one and the same formation, because of the democratic principles that the biggest formation should nominate a chairman and because of the goal to increase the work in Sofia to a new speed. 

ECONOMY

24 Chasa’s front-page article presents the changes envisaged in the bill to amend the Value Added Tax Act proposed by the Finance Ministry. Among these changes is a fine of BGN 10 if a client does not take their receipt; if no receipt is issued, the client can leave without paying their bill.  Also, the sanctions for traders are increased several-fold.

24 Chasa has an interview with Petar Ganev, chief researcher at the Institute for Market Economics, who talks about taxes and inflation. According to him, the latter will drop, reaching even 4%. Local taxes should be changed in the first year of a mayor’s mandate, never in the third and fourth year, he argues. According to him, the debate on financial decentralization will be renewed. If 2% of the income tax remains in municipalities’ budgets instead of going to the Exchequer, they will have BGN 900 million, which is more than all of their local taxes.  
 
Trud has an interview with Atanas Katsarchev, chief economist of the Podkrepa Confederation of Labour and former deputy finance minister, who comments on the proposed changes to tax laws tabled in Parliament by the Council of Ministers. He describes the proposal to increase the property tax by some 50% to 60% as absolutely inadequate and very risky, given that two-thirds of households in Bulgaria live with the bare minimum, and one-third live under the poverty line.  

Telegraf quotes Vassil Terziev, who swore in as Mayor of Sofia on Monday, as saying that he will not increase the local taxes. 

Duma quotes Bulgarian Socialist Party (BSP) Deputy Chairman Ivan Chenchev as saying in a televised interview on Monday that his party will vote against the 2024 State Budget Bill as proposed by the Cabinet, because it goes against Bulgarian citizens’ social protection upheld by the BSP. “We will firmly not agree to the increase of taxes. The very idea of such proposals is dangerous. The talks with the mayors and municipalities’ representatives are extremely important, because there are unfinished projects and entire cities with infrastructure in construction,” he said.

An article at segabg.com reads that the 2024 State Budget Bill presented by Finance Minister Assen Vassilev to journalists on November 10 has been met with brutal criticism from all sides. Economists have described it as the most populist and lavish budget. According to economist Kuzman Iliev, there are no grounds to expect such a big growth (of 3.2% in 2024, compared to this year’s 1.8%), given that Bulgaria’s main trade partner – Germany – and other EU countries are already in recession and Bulgarian exports are dropping. Thus, the increased tax revenue of nearly BGN 10 billion (12%) are completely groundless, too. Revenue underperformance will open an even bigger hole in the budget, he argues. Employer organizations too are shocked by the excessive optimism of the Finance Minister. Bulgarian Industrial Capital Association head Vassil Velev confirmed that for months now, the industry has been shrinking, and the polls among the organization’s members show this downward trend will increase in 2024. “It is worrisome that the expenditure is not backed with revenue, and a deficit of 3% is set not only for next year but for the next three years,” Velev comments. Businesses are worried too, because it is very probable that the planned deficit of 3% will be exceeded, meaning yet another postponement of Bulgaria’s eurozone membership.

On Nova TV’s morning show, Confederation of Independent Trade Unions in Bulgaria Plamen Dimitrov called the 2024 State Budget Bill ‘tense’. There is no money for an increase in salaries. The Exchequer needs an additional BGN 1 billion to achieve the planned increase of 10% to 12% in the average salary. Finance Minister Vassilev boasting that he will raise salaries with BGN 1.4 billion is fake news, because half comes from the increase made several months ago, Dimitrov argued. Also, there isn’t enough money for energy expenditure; if Gazprom refuses to pay, some BGN 2 billion from gas fees will not enter the Exchequer.  According to him, if capital expenditure is reduced and money is allocated for salaries to maintain incomes close to the inflation rate, the budget will become good.

On bTV’s morning show, former finance minister Simeon Dyankov called the 2024 State Budget Bill “absolutely unrealistic in its revenue part and in no way implementable”. In his words, the draft budget is such that you have a cake for breakfast but absolutely no food for lunch, dinner and the coming days. By March or April it will become clear that the budget cannot be implemented. The The European Commission will make its forecast for the Eurozone in April. As early as on January 15 we will know the annual inflation and the deficit, so it will be clear as early as then that Bulgaria will not enter the euro area. “We will officially know it in April,” Dyankov argued. 

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Capital.bg has an article on the outsourcing sector in Bulgaria, according to which 2023 is the last – at least for now – strong year for the sector. In 2022, the top ten companies offering business process outsourcing (BPO) reported an increase in revenues of nearly 11% (to BGN 1.19 billion from BGN 1.07 billion in 2021), but the slowing down in the industry is already felt strongly in 2023. This year, many of the companies in the sector reduced the number of their employees or stopped hiring. The share of the outsourcing sector in Bulgaria’s GDP is expected to reach 9% in 2025. 

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Telegraf has a front-page story and an analysis on what ingredients actually go into the food Bulgarians purchase, making it unhealthy. For example, producers put potatoes in lyutenitsa, which is a traditional vegetable relish, when there are not supposed to be any. Similarly, potatoes are put in the Snezhanka salad of yogurt and cucumbers. Counterfeit products have taken over the Bulgarian’s table, the daily writes.