New Green Tax Infuriates Businessmen
A real tsunami for producers of energy from renewable energy sources was prepared by lawmakers in Bulgaria last week. On Wednesday (27 November) during the voting of the transitional and final provisions of the budget for 2014 in the respective committee Volen Siderov of Ataka party surprisingly proposed an imposition of a tax on income from electricity produced of solar and wind power. It will be determined by a formula under which the amounts sold as solar and wind energy will be multiplied by the preferential price, which was given to these producers by the state regulator and from the resulting amount 20 percent in tax will be deducted.
Although done without any consultation with the business, without estimates of the effect on the energy market and expected income, and without the knowledge of the financial and economic ministries, the proposal was accepted.
The fee will be deducted from the National Electricity Company and will go to the budget. How this money will be spent has yet to be decided by the Parliament, but the goal is to put an end to the expensive lunch that society pays for the producers of renewable electricity, said the chairman of the budgetary committee Jordan Tsonev after the meeting.
The expected reaction from the green businessmen came swiftly after that. The proposal accepted by the Committee on Budget and Finance for a 20 percent tax on the income of producers of electricity from solar and wind power came as a surprise to the entire sector. Such fee has never been discussed with the producers in the sector. The decision is illegal, discriminatory and has not been transparently passed. It is contrary to the Constitution, European directives, the guidelines of the European Commission to the Member States, it ignores the recommendations in the report of the European Bank for Reconstruction and Development, which only last week downgraded the investment rating of Bulgaria because of government action restricting manufacturers from renewable energy sources, said the Bulgarian Photovoltaic Association.
Representatives of the sector organization defined reports that the new tax will reduce the cost of electricity as an outright manipulation. They reiterated their argument that the photovoltaic energy that is now produced forms only 3 percent of the country's energy mix and can hardly affect the final price.
The decision of Bulgaria's Parliament is contrary to the conditions under which investments were made while it is discriminatory because it applies only to producers of electricity from sun and wind, whereas preferential prices for electricity are paid to energy from biomass, cogeneration and other condensation processes producing electricity. During our meetings in recent months at all levels of the government and the Parliament, Deputy Prime Minister and sector Minister, it was clearly stated that the reforms in the energy sector will be made in an open dialogue and there will be no overnight surprises. Recent developments represent the opposite picture, pointed out the Bulgarian Photovoltaic Association.
According to them, this will affect the interests of large investors such as the World Bank, the European Bank for Reconstruction and Development, The Bank of Korea and 2,000 small and medium-sized companies that have invested in the sector. The bankruptcy of these companies as a result of yesterday's discriminatory tax will lead to the closure of thousands of jobs and will further worsen the investment and business climate in the country, insiders commented.
Our members have been on standby since yesterday and will seek the right to express their anger and disagreement with the decision through protests on the streets of the city of Sofia. We insist on the urgent official position of Prime Minister Oresharski. Should the decision be taken by the Parliament, we will pursue our rights through the courts in Bulgaria and in Strasbourg. This is a nationalization of an important sector in energy, provoked by Ataka party, said Meglena Rusenova, Chairperson of the Management Board of the Bulgarian Photovoltaic Association.