THE GOVERNMENT LIFTS THE MUNICIPAL TAX
On the eve of the Easter holidays the Premier Simeon Saxe-Coburg-Gotha, the ministers and MPs from the National Movement Simeon II and the Movement for Rights and Freedoms, held a 4-hour debate in the National Assembly on the governors' economic and budget policies for the year 2003. The Prime Minister and the Deputy Premier and Minister of Labour and Social Policy Lidiya Shouleva left the discussion an hour and a half after it began. The Vice Premier and Minister of Economy Nikolai Vassilev also left due to urgent tasks. Thus, the brunt of the debate, which was held behind closed doors, was born by the Deputy Premier Kostadin Paskalev, the Finance Minister Milen Velchev and his deputy Gati Al Djeburi, and by the Chairmen of the Parliamentary Economic Commission Valeri Dimitrov and of the Budget and Finance Commission Ivan Iskrov.Mr. Gati Al Djeburi, who was entrusted the important task to speak in front of journalists after the discussion, explained briefly that amendments to taxation legislation were considerated, aimed to simplify the taxation mechanism and relieve the tax burden on businessmen. The Deputy Finance Minister said that the specific decisions would be made public at a press conference on May 7.In an unofficial conversation the Deputy PM Paskalev threw more light on the discussed issues. According to him, the Government will propose to Parliament to lift the 10-percent municipal tax under the Corporate Income Taxation Act. It will be accumulated in a single tax (most probably 23 per cent), to be charged on the companies' profit. But the firms' taxes will not decrease much in that case, because presently they pay the municipal tax first, and another 15% on the remaining profit afterwards. Under the effective taxation scheme, the companies pay a 23.5% profit tax.The Government is considering to increase the allowances for depreciation, which businessmen could calculate on their assets. In that way the expenses to be acknowledged when taxes are paid will go up.A new rate schedule for taxation of natural persons' incomes will be worked out for 2003 as well, in which the taxes charged from people with higher incomes will remain unchanged from 2002, and the taxes paid by persons with lower incomes will be reduced by some 2-3 per cent. The opportunity of giving to municipalities 90% of the proceeds from the taxes on natural persons' incomes, (including the patent taxes) and the balance of 10% going directly to the republican budget, is being considered as well. The ratio is presently 50:50 and Mr. Paskalev believes that the change will not only compensate the local administrations' budgets for the lift of the municipal tax but will also increase their financial independence.