Банкеръ Weekly

Briefs

MINISTERS AGRUE ABOUT FAMILY TAXATION

The former finance minister Mouravei Radev and the former minister of foreign affairs Georgi Pirinski provoked by projects about family taxation the Government's cautious steps in the sphere of taxes. As far as Mr. Radev is concerned, only until a year and a half ago it would had been absolutely impossible to imagine him as a champion of a more fair distribution of the family tax burden. Family taxation, together with the introduction of lower VAT on bread and some other goods, was the preference refused over the last few years with the argument that it would make more difficult the work of tax authorities. The incumbent governers obviously do not think in the same way. This explains why the Deputy Finance Minister Gati Al Djeburi won't spare time to examine the proposals of MPs from the opposition. The draft prepared by Mr. Radev and another seven deputies from the UDF-coalition, projecting amendments to the Natural Persons Income Taxation Act, lays the accent on the simplified scheme for family income taxation, proposed by them. It stipulates that a certain monthly amount (depending on the number of children under age) should be deducted from the annual family income. From a technical point of view it is important that the proposed amendment concerns art. 14, which determines the tax-exempt incomes on prinicple. And the introduction of the monthly amount per child is through a supplement to art. 19, which concerns incomes from labour relations that are not liable to taxation. This practically means that the respective monthly sums would be deducted only from the incomes of people employed under labour contracts. For the other parents the prefernce will be valid only when they submit their annual taxation declaration, i.e. they will be refunded the excess tax, they have already paid. Mr. Pirinski's draft follows the same logics, but contains an additional condition - that this tax-exempt money should be used for the purchase of textbooks. The monthly tax-exempt amounts in that draft and the annual preference are a little higher. Family income taxation has been introduced in countries where tax-payers' conduct is entirely different, Finance Minister Gati Al Djeburi explained during the darfts' discussion in the Parliamentary Budget Committee. He announced that 1,000,000 employed do not pay income taxes at all as they declare monthly incomes below BGN110. The Deputy Finance Minister believes that the introduction of such a preference would deprive the budget of revenues amounting BGN120MN (aggregate proceeds from income taxes have been preestimated at BGN1.2BN). If we are speaking about BGN120MN only, you are encouraging me to insist still more on the introduction of family income taxation, Mr. Pirinski noted. And the former finance minister Mouravei Radev commented that the scheme proposed by him would cut down budget proceeds by BGN10MN only.Thus, the debate which is not likely to enter the plenary hall, was reduced to the well-known dilemma: which should be decreased first - the tax burden in order to improve collectibility, or the number of incorrect tax-payers in order to ensure a resource for reducing the tax rates?

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