Банкеръ Weekly

Briefs

Garbage Rates Stay Flat, Expect Methodology Shift

"On the next New Year’s day the huge waste containers that handicap urban traffic will need to go under key into the buildings that use them in order to achieve a fairer waste fee according to the quantity and quality of garbage. This way, the trash dirt will become the most closely guarded national product," said exclusively for the BANKER Emil Savov, deputy executive director of the National Association of Municipalities in Bulgaria. The vicious present system for determining the fee according to the tax assessment of the property will be no longer applied from the first of January next year. Each municipality, even each region will have to choose another way of calculating the tax: according to the amount of garbage or according to basic electricity bills, water or anything else, but not the assessment of the property itself.

For residential complexes the change will be most extreme. Containers from the streets and spaces will disappear to appear in basements and in the so-called “common areas” of the buildings. How much everybody disposes and how much is to be paid will be no question of centralized determining from top and bottom – but of the governing bodies of the condominium.
Experts working on the methodologies for calculating the garbage fee, portend even more apocalyptic picture for the citizens next year. "In places where a certain type of construction is predominant there will be local leaps in the volume charge," they said. This will happen because the change will benefit businesses that now pay unfairly in times more than citizens and municipalities will have to transfer the centre of burden from it to the population. For example, the "binding" of the garbage fee to the consumption of electricity will be the strongest blow. It is clear from now. For example, it would benefit the people of the villa areas using their houses and huts only in the summer period.

Before making everyone "happy" with this revolutionary change, however, this year state employees have to do a tremendous job. By the end of March the new mechanism for determining the fee will have to be ready so that in the autumn a new methodology may be approved by the Ministry of Finance. This way the municipalities will receive several months to prepare for the fateful date of the 1 January 2016.

Municipalities did not touch the fee as of this year. And how could it be otherwise – they are shortly expecting, apart from a revolution in the way of calculating the fee for garbage, also local elections, which causes them to avoid taking any initiatives affecting pockets of voters.

Large municipalities as a rule left unchanged the amount of "garbage tax". Only in Stara Zagora and Lovech they dared to increase the fee for garbage, arguing that every year the amounts that the municipalities pay to the state increase per tonne of disposed waste.

And this is exactly the correct, economizing way of thinking. These deductions for disposal are for that state to pay for its non-fulfilled commitment to a more civilized European waste disposal system. This year, municipalities will have to pay 28 s per tonne – by 6 levs more than last year. The municipality in Varna - a city that in recent years has experienced dramatic political conflict and extraordinary elections, even reduced the fee for garbage - locals will pay by 0.2 per thousand less for properties of individuals. So they will pay 3.7 per thousand on the tax value of their property instead of 3.9 as last year. "In the last few years we have seen the practice whereby  companies register in the neighboring municipalities of Varna to save on local taxes of the largest municipality, leading to a reduction of revenue in the city budget," explained the reasons Mayor Ivan Portnih.

Why - at least for now - municipalities fail to react to the plans of the state? The explanation is that they have figured out ways to achieve savings in waste collection and disposal, and have taken measures to reduce waste quantities and the like. The increase in payments, however, is about 20% and these explanations are hardly completely correct as the towns probably can’t cover new municipal spending.
Sofia residents will pay the old rates for taxes this year because of a failed introduction of a new methodology for calculating the garbage fee. Deputy Mayor for Finance Doncho Barbalov repeatedly announced that the city will rely on a better collection rate, so that the tax campaign in Sofia will start a month earlier - on 1 February.

In Plovdiv, Burgas, Dobrich, Rousse, Sliven, Blagoevgrad and Veliko Tarnovo the rates also remain unchanged.

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