Банкеръ Daily


Ivan Kostov: Money Should Not Be Handed to People Free of Charge

It is not possible to give away money to the people in need and free of charge, because the resources available to the government are limited, otherwise we will end up with a huge deficit. This was said to BNR by Ivan Kostov - Prime Minister of Bulgaria from 1997 to 2001.

"The EU says GDP will fall by 7.2%, which is BGN 8.5 billion. The government has nowhere to withdraw this money from to compensate for the decline in incom and consumer demand. These are populist calls. Even if the money is taken out of somewhere, it cannot be used, it will go through channels other than the normal ones. Flowing through new channels will make corruption even more massive," the former prime minister said.

Kostov stressed that the economic measures for overcoming  the damages from the crisis not only in Bulgaria but also in many other countries have been taken under the pressure of society:

"A wide range of measures were prepared, including credit vacations, deferral of services, interest-free loans and grants, paying part of the workers' salaries which was all good. It is clear that the government must stay ahead of events and it is trying to do so. The whole world is unprepared for the crisis and this can be seen everywhere. "

According to the former prime minister, the measure to reduce VAT for the restaurant industry is offensive and very inadequate:

"It destroys many balances in the tax system and suggests that this business is in the informal sector. Because if it was formalized, it would be interested in recovering a tax credit - you buy and pay  at 20% VAT and then sell  at 9% VAT, which raises doubts that the sector is very far from being operational. "

Kostov asked why this "irregular and gray sector" was  given such benefits and suggested t it was the result of pressure  the government should not have succumbed to.

According to Ivan Kostov, the tax model with progressive rates for both income and income tax should be restored to Bulgaria. He was adamant that it was inappropriate to change the tax system in the middle of the year, because it would not be possible to take into account how the crisis had affected budget revenues, which, in turn, hindered planning and economic strategies from now on.

Ivan Kostov described the idea to establish a state enterprise "State Oil Company"  which will have its own gas stations and warehouses throughout the country as extremely ill-considered and suspected that this  is being done to compensate a non-functioning body, such as the Commission for Protection of Competition:

“What will happen if the state gets back to the sector? I don't know how the EC will look at such a thing ", he asked and pointed out that the state should separate the producer of liquid fuels from the warehouse-keeper,  while the warehouse-keepers should be separated from the owners of the  petrol stations, so that there is no vertical monopolization of the sector. "Then there will be normal competition. Why not do so?"

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