Банкеръ Daily


Is the publicans’ lobby that strong?

It turned out the pub lobby is stronger than the newspaper one? The restaurants triggered a value added tax reduction (VAT) by Prime Minister Boyko Borissov, despite the position of the financial blades in GERB - Minister Vladislav Goranov and the chairman of the budget committee Menda Stoyanova. The print media were again sidetracked, perhaps because some of them remained critical of the monstrosities in the country. Or because reading is not among the favorite pastimes of those in power ...


The revision of VAT appeared to be a national cause for the MPs, who are generally ready to quarrel and spit on any topic. The forecast, given by  many financiers at the very beginning of the debate was met - if you touch the tax for one branch - you open the Pandora's box. Everyone will ask. And it started raining demands from both branches and political forces.


There are now six bills to reduce VAT on a number of goods and services. Starting with diapers and going to gyms. So the government found itself with its pants down, because you can't give someone something and others - nothing! You will seem bad in someone's eyes and as we know, Prime Minister Borissov does not like that. He loves to be loved.


In this line of thought, the print media should also ask for in order to be given. It is a matter of over-writing - in GERB and "United Patriots’" bill which removes VAT on the supply of books, textbooks, reference books, etc. The argument is the one used by the prime minister: "We pack people's food - it is food, the other is spiritual food!"


There are two options – VAT reduction for everyone or for no one. The second includes Borissov listening to his finance minister, even though Goranov is not his boss and abandon this initiative. The Ministry of Finance estimates are eloquent - in order to offset the losses, the total VAT rate should be raised to 24% or the profit tax for the business should be raised to 17-18%. Since a 24% per capita tax will totally kill the population, obviously the corporate profit tax will be targeted.


The ministry has estimated that the budget loss from the proposals in the 6 bills amounts to BGN 1.8 billion in revenues.


The biggest loss would be the rate reduction for medicines and basic foods, which the BSP insists on - BGN 1.5 billion.


The lower tax for restaurateurs, which was agreed on by Borisov, will cost the budget BGN 150 million.


Reducing the VAT to 9% for books, textbooks and training aids will deprive the budget of BGN 13 million and of baby food, children's pharmaceuticals and diapers, as proposed by MP Delyan Peevski - BGN 39 million.


The loss from the gyms would be BGN 4 million, and from the general tourist services - BGN 19 million.


Not to mention that restaurateurs are the last to deserve tax breaks, even temporary ones - most of them work without fiscal apparatus, they do not issue receipts and their staff is not contract-employed.


If the newspapers are included in the group with 9% VAT, the budget will be deprived of BGN 5 million per year at most.


All these demands cannot withdraw more than BGN 700 million from the treasury, as much as the sum gifted to Bozhkov due to unpaid gambling fees.

According to the Bulgarian Chamber of Commerce and Industry, the effect will be budget losses, increasing the administrative burden in terms of taxes and even the lack of a final price effect on consumers.


To put it bluntly: it is not good to encourage those who have long stepped in the gray sector. And to foster them against the promise they will report their turnovers properly, after years of not doing so. Well, you know, this is a snipe hunt.

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