Prof. Daniela Bobeva is convinced:”You don’t trigger tax changes in crisis conditions
Tax changes shouldn’t be made in times of crisis. There are many other side factors that reduce the effect of such changes. This was stated by the financier and former Economic Deputy Prime Minister Prof. Daniela Bobeva on the occasion of the VAT reduction for bars, discos and restaurants.
According to her, reducing the rate will not help the sector recover from the shock. "The reduction in VAT revenues is unlikely to cause a collapse of the budget. Given that budget revenues are declining, the deficit and expenditures are increasing, it doesn’t seem serious to take such measures at this very moment. From a fiscal point of view it has a destructive effect. From an economic point of view there is no use, "Bobeva told the national radio.
The financier says that according to a theory when tax rates are reduced, businesses are more inclined to pay taxes than to evade them. "But the effect will be marginal," she said, stressing that "all this between the minister and the prime minister is something of a game for gullibles."
“ The tax system is not to be restructured before the elections. The introduction of progressive taxation will be a hidden form of general tax increase," she said.
Prof. Daniela Bobeva was adamant that the expansion of the public sector through the setting up of new state-owned enterprises is the most brutal form of draining money from the state and the taxpayers. The economist pointed out that the Bulgarian economy is open and the reduction of external demand will affect it badly.
"Bad things in the economy as an external environment will have an impact next year. We will absorb the shock of being at home for two months much faster, but the deterioration of the external environment will have a very negative role on economic growth. A drop of about 4-5% is most likely, "she said.
Bobeva also admitted a doubling of youth unemployment. "The structure of the economy which is totally flawed will be put on the agenda - the labor force is mainly employed in labor-intensive sectors, and we have the worst demographic situation and prospects in the European Union. "Our economy has many structural problems that the coronavirus has accelerated and displayed to be more obvious." the professor concluded, predicting difficult years and restructuring in tourism.