Банкеръ Daily


Helping Businesses Differs from Helping Business Owners, Says Konstantin Prodanov

"We should distinguish between helping businesses and helping business owners. This business can employ 70,000 people - waiters, cooks, etc., but they do not own a business and the measure (reduction of VAT to 9%) does not help them. It helps restaurant owners who are not ashamed to say that their business is one of the most informal sectors. They did not hold back from saying that by reducing their VAT, they will not reduce prices,” financier Konstantin Prodanov told BNR.


According to him, even if restaurant prices go down after the VAT reduction, it is unlikely this will help those most affected by the crisis, - more than 120,000 people who lost their jobs and "are unlikely to go to a restaurant to take advantage of this measure".


The financier also commented that any change in the tax system must meet at least one of three conditions - to encourage consumption or encourage businesses to invest; to redistribute from those who can bear the burden to those who cannot; to give the fiscal authority some means of providing public goods. "None of these conditions are met with the measure that is currently being proposed," he said.


Prodanov pointed out that there is no political logic in this measure. "Changes in the tax system should be made not by sectors, but by goods," he explained, adding: "This will monitor whether the person who pays the tax benefits, whether his situation is made easier thus leaving more money for the fiscal system."


According to Prodanov, a debate is needed in Bulgaria on what the tax system should be, because now it is unsuitable from a social and economic point of view. "It is anti-social because we are the only country in the EU, apart from Denmark, where there are no lower VAT rates for basic necessities, books, etc.," he concluded.

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