During a crisis, the state expenditures should be distributed more efficiently rather than increased, Institute of Market Economy expert Dimiter Chobanov told a news conference at the BTA Press Club on Sunday.

An alternative national budget for 2009 with low taxes was presented during the briefing.

Chobanov pointed out that the additional expenditures incurred by the Government to support non-productive enterprises and sectors of economy would prolong the crisis. These are measures taken under pressure, which are at the expense of all tax-payers, the economist said.

According to him, the distribution of state costs could be more efficient and the taxation lower. Bulgaria ranks last in the European Union regarding efficiency of public expenditures.

Georgi Angelov, Senior Economist of the Open Society Institute proposes the 2009 budget to envisage a sharp decrease of taxation regarding social security of both companies and individuals to 10 per cent from existing 33.7 per cent. The quasi taxation burden in the form of state fees and charges should be reduced significantly to stimulate entrepreneurs, he said. The alternative budget includes also a 10 per cent tax for the sole merchants and dropping the tax on dividend.

To alleviate the lack of foreign investments during crisis, the economists suggest that every employee has a personal pension account, and the pension contribution to be increased to 10 per cent.

Angelov suggested that a few buffers against the crisis were envisaged in the budget. The economists want a higher reserve to the amount of 600 million Bulgarian leva, a budget surplus of 3 per cent of GDP, savings of 5 per cent of all budget costs and earmarking expenditures, which might be limited.

Source: BTA