The Council of Ministers Thursday approved a report on the implementation of the consolidated
fiscal program for the first half of 2008 and will lay it before the National Assembly, the Government Information Service said.

The 14,029.5 million leva revenue collected under the consolidated fiscal programme for January-June 2008 represents 51.6 per cent of the annual estimate and shows a 24.7 per cent rise from the revenue reported for the like period a year ago.

This is due mainly to a 21.9 per cent year-on-year increase in tax revenue. Direct tax revenue amounted to 2,877.2 million leva by June 30, 2008, or 55.4 per cent of the annual target and 24.6 per cent up from the first half of last year. The principal factor of this development is the changes in tax policy in recent years concerning corporation tax and income taxes on natural persons, the press release says.

Judging by the results reported, a positive fiscal effect can be expected from the reduced tax rates, in terms of a broader tax base of declared taxes, a steady economic growth, increased corporate profits and wages, and lower unemployment.

Indirect taxes yielded a revenue of 5,776.8 million leva, which represents 47.4 per cent of the annual estimates and a 27.5 per cent rise from the first half of 2007. This was mainly due to a substantial rise in the prices of the principal energy products and the amount of import.

Value added tax revenue in 2008 registered a substantial rise compared to the like period of 2007 as a result of the revisions in the statutory framework in 2007 after Bulgaria's accession to the EU.

The 2,502.6 million leva collected in social and health insurance contributions in the first half accounted for 52.1 per cent of the total planned for 2008.

Non-tax revenue added up to 1,927.1 million leva, or 61.9 per cent of the annual estimates and approximately the same level as in January-June 2007.

The 945.8 million leva grants (mainly advances from the EU Cohesion Fund and Structural Funds, as well as advances from EU Common Agricultural Policy funds managed by the Paying Agency at the Agriculture State Fund) also contributed to the year-on-year rise in revenue.

Consolidated budget expenditure, including Bulgaria's contribution to the EU budget, amounted to 10,251.9 million leva by June 30, 2008, or 40.4 per cent of the annual estimate, the report says.

Traditionally, the absorption of expenditure, mainly in the part of investment expenditure, is lower in the first half of the year and is left for July-December.

The fiscal reserve was 10,218.3 million leva by June 30, 2008.

Source: BTA