Business Opposes Ideas for 15% VAT and 15% Income Tax
The Bulgarian Chamber of Commerce and Industry and the Bulgarian Industrial Association reject the Confederation of Independent Trade Unions of Bulgaria's proposals for changing the tax system.
The introduction of 15% VAT and 15% tax on the income of natural and legal persons is among the main ideas of the syndicate.
According to the BCCI, a system that works well should not be changed and any change in the country's tax system can create not only ambiguity, but even chaos among businesses and citizens and the possibility of a negative effect on collection rate.
"Indeed, in a number of countries, VAT reduction is among the measures taken by their governments to limit the negative effects of on the COVID-19 on the economy but in most cases its decrease does not lead to and does not guarantee a price reduction for the final consumer happened in Bulgaria with the last VAT reduction and had been predicted by the BCCI. This tax takes the largest share of revenue in the budget and its reduction will undoubtedly lead to an increase in other taxes or the introduction of new ones. Moreover, the change in the tax system will undoubtedly create opportunities (loopholes) to circumvent the taxation system, which leads to an increase in the grey sector in Bulgaria, not its reduction", the employer organization explains.
Their opinion says that with regard to the proposals for a non-taxable minimum equal to the minimum wage for the country and the introduction of a 15% personal income tax and corporate income tax, "it is inadmissible for some to benefit at the expense of others." BCCI believes that the most losers will be people who receive high incomes because they have invested in their education and who generate the highest added value, and / or are deprived of opportunities for recreation, working in more than one place.
"On the other hand, companies now pay 15% income tax (10% - corporation tax and 5% dividend tax or 15% for sole proprietors). Despite the small amount of investment in Bulgaria, the country has a competitive advantage – low tax rates.
The increase of the burden for the business will have an additional negative impact on the investment activity in our country - both for the local companies and for the international companies, which have chosen our country.
Such an approach is detrimental to the market economy because it discourages the most active citizens in society from improving their skills and seeking additional employment, "the organization said.
The Bulgarian Industrial Association (BIA) has announced that it does not support making radical changes to the tax system, including the introduction of new taxes, without a thorough impact assessment and a broad public and expert debate.
The organization points out that the changes to the tax system in the absence of public spending reforms, transparency, legislative control, low efficiency and lack of appropriateness of some public investment will not produce the expected results.
BIA believes that reforms should be undertaken in the medium term in the state and local fees’ system and that they should be linked to the economically necessary costs for the provision of the relevant public services.