Several trends in recent years prove that the grey sector in Bulgaria is in decline, National Revenue Agency Executive Director Maria Mourgina said Wednesday. She and Finance Minister Plamen Oresharski, Prosecutor General Boris Velchev and National Customs Agency Director Hristo Koulishev went to brief the National Assembly Budget and Finance Committee and Economic Policy Committee on the containment of the grey sector in the economy, her agency said.

Mourgina said that one of the main reasons for these positive results is the agency strategy to stimulate voluntary execution and improvement of the services offered by NRA. The "revenue per official" indicator is indicative in this respect as it has increased 3.5-fold in the last five years. In just the last three years revenue per one NRA official increased nearly twofold. When the agency was launched in 2006 this indicators was an average 991.2 leva while in 2008 the sum amounts to 1,805 leva per official.

According to Mourgina's report to the committee, the government policy of reducing taxation is another reason for this development. Corporate tax rate reduction from more than 30 per cent (in 1997) to 15 per cent (in 2005) led to a very small increase of the taxable profit:GDP ratio (from 13 to 14 per cent). A serious increase began only after 2006 when the ratio grew from 16 per cent (in 2006) to 33 per cent in 2008.

This assertion is supported by the fact that the VAT taxable base with the tax itself reached from 42 per cent of end consumption in 1997 to 89 per cent in 2008. at preserving a relatively constant share of VAT-free goods and services in the years one could claim that the trend shown is definite proof of decline of the grey sector, Mourgina said.

There is a grey sector, but it is in controlled quantities, Oresharski said in turn. He also noted that there is a trend for the grey economy to shrink.

According to Velchev, it would be a very big mistake to rely on criminal regression as a measure to counteract the grey sector. Prevention that would guarantee that the people will pay taxes and social security contributions is what stakes should be set on.

We do not admit it, but we don't have a Criminal Code for two-thirds of the crimes are prosecuted by the procedure of the Code of Criminal Procedure, bringing administrative penalties of up to 5,000 leva, Velchev said. We should be great optimists if we think we shall achieve prevention with such policy and will make someone give up crime because of the risk to be subject to penalty, he added.

Customs Agency Director Koulishev pointed out that foreign currency in excess of 2,116,160 euro and 50,000 dollars, as well as 29 kg of gold objects have been detained in the fight against the grey economy in 2008. A total of 10 million cigarettes and 94,000 bottles of alcoholic beverages with counterfeit excise duty stamps were also intercepted in the same period, he added.

Source: BTA