Bulgarian Industrial Capital Association Presents Position on the 2008 National Budget Act

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The Bulgarian Industrial Capital Association presented Monday its position on the 2008 National Budget Act at the BTA National Press Club. According to this organization, the positive points in the budget include:

-- more realistic revenue planning - a 27.2 per cent rise
year-on-year,including tax revenue increase of 25.9 per cent;

-- the introduction of 10 per cent flat income tax for natural
persons without a tax-free minimum;

-- capital costs increase by more than 50 per cent year-on-year;

-- the introduction of program budgets for all ministries and
state agencies;

-- the formation of 3 per cent of GDP budget surplus as a
counterbalance of the increasing trade deficit and current
account deficit (21.9 per cent);

-- increase of the funds for education and health care, as well
as the introduction of delegated school budgets;

-- change in the ratio of health insurance contributions paid by
employers and employees from 65/35 to 60/40;

-- reduction of dividends tax from 7 to 5 per cent;

-- reduction of sole trader income tax rate from 24 to 15 per
cent;

-- introduction of centralized reserve (300 million leva) for
fiscal sustainability instead of keeping back 10 per cent of the
costs of first-tier budget organizations;

-- eradication of advance payments on corporate tax for
companies with less than 100,000 sales revenue a year;

According to the Bulgarian Industrial Capital Association, the
drawbacks of the 2008 budget include:

-- a high degree of GDP redistribution though the budget - 44.1
per cent of GDP for the revenue part and 40 per cent plus 1.1
per cent (the EU installment) for the expenditure part;

-- reduction of public spending by 12 per cent is an
insufficient step in the right direction: the association wants
20 per cent;

-- absence of planned reduction of insurance contribution in
2008. The association suggests that they be reduced to 30 per
cent and be divided equally (10 per cent each) between employer,
employee and state;

-- according to the association one particularly negative
feature of Budget 2008 is the establishment of lower threshold
of local taxes and fees without giving municipalities the right
to reduce them.

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