The key task for 2009 is retaining the conditions for a relatively high economic growth of 6 per
cent at the background of the global economic slowdown, Finance Minister Plamen Oresharski said Tuesday, presenting key data of the 2009 draft budget at a meeting with employers' organizations. The meeting was invited by the Bulgarian Socialist Party.

Inflation in 2009 should be a bit lower than in 2008 while the current account deficit is expected to be between 20 and 23 per cent. Foreign direct investments are expected to remain at their 2008 level.

Oresharski aid that no major changes are planned in the tax system. The corporate and personal income tax will remain at 10 per cent while the value added tax will remain at 20 per cent. Insurance payments are expected to undergo some changes. Oresharski said that the insurance burden will be distributed in a 8-10-12 ratio paid by employee, employer and State, respectively, as decided at an extended meeting of the ruling coalition on May 10 and 11.

The draft budget lays particular stress on education, health care and social services and assistance to the most vulnerable groups of the population. Oresharski said that public investment will reach about 7 per cent of the Gross Domestic Product, against under 5 per cent in 2005.

The Finance Minister said that decentralization will continue. Unified standards for remuneration of local administration staff will be introduced next year which are expected to do away with the existing disparities among salaries of local power staff in the different administrations.

2009 is expected to be ever more active in the absorption of European funds, Oresharski said.

Meanwhile, representatives of employers' organizations met with members of the Supreme Council of the Bulgarian Socialist Party. The employers insist that the funds from the budget surplus be
invested in sectors, which can be controlled, such as the upgrading of infrastructure, Bulgarian Industrial Association President Bozhidar Danev told a news conference after the meeting.

The business is in favor of a uniform VAT rate because different rates could stimulate the growing of the grey sector and become a precondition for the so-called "tax tourism" given that there are different rates in neighboring countries.

According to Tsvetan Simeonov, Vice President of the Bulgarian Chamber of Commerce and Industry, the VAT rate should not be changed for the time being if the tax administration improves its performance. Simeonov referred to a survey among members of the organization showing that 30 per cent of businessmen continue to have problems with the tax credit refund terms.

Source: BTA