site.btaInstitute of Market Economics Unveils Alternative State Budget with Lower Expenditures and Revenues, and 1.5% Deficit

The Institute for Market Economics (IME) Monday unveiled an alternative state budget - as it does every year after the government puts out the state budget bill. The IME budget reduces the social security burden by 10 percentage points and has a zero tax for company profits that are reinvested. This raises the net income of companies and the income of people by much more than the 13% planned by the government, IME chief economist Lachezar Bogdanov told journalists.

"The spending and revenue cuts we propose will lead to a budget deficit of 1.5% of GDP next year, instead of the 3% planned by the cabinet," Bogdanov said. By implementing our measures, we expect the budget deficit to shrink to zero by 2026. If the government manages to collect the BGN 20/MWh fee on Russian gas imports from Gazprom and tax the profit of Lukoil Neftochim Burgas, these two revenue sources will eliminate the budget deficit already this year.

State intervention and redistribution through the budget should be limited, public spending should be efficient and the budgeting process should be predictable and transparent, the IME said.

They propose a package of tax cuts for economic modernization, fewer subsidies and higher tax compliance.

"We are moving ever closer to the bottom of investment and at the same time we have record profits and deposit growth for companies and households, as well as a demographic crisis and an outflow of labour, although demand for labour remains high," says the IME.