Bulgaria think-tank presents leaner ‘alternative Budget’ for 2015

Written by on December 9, 2014 in Bulgaria - Comments Off on Bulgaria think-tank presents leaner ‘alternative Budget’ for 2015

Sofia-based think-tank Institute for Market Economics (IME) presented on December 9 its annual “alternative Budget” for 2015 – a leaner bill with lower Government spending and reduced deficit – that has become a traditional staple of the annual Budget proceedings.

The proposals made by IME are a familiar lot, the same it has been making for years, largely unchanged as Bulgaria continues to struggle with tepid growth after the global financial crisis, which hit the country during Boiko Borissov’s previous term as prime minister.

To boot, these include a 10 per cent cut in the payroll and current spending of the public administration, on top of the 10 per cent cut put forth in the Cabinet bill, which would help save 740 million leva in Government spending. IME also suggested abolishing several taxes that the think-tank sees as inefficient and further compounding the burden on taxpayers – taxes on dividend (now at five per cent) and deposit interest (eight per cent) among them.

Other proposals include removing tax breaks in certain areas, like the lower value-added tax rate on tourist services, in the agriculture sector and food vouchers. Additionally, IME’s budget envisions the sale of under-performing state companies, such as the state railways and postal services firms.

Equally familiar are IME’s proposals for pension and health care reform – allowing people to pay some of their pension contribution (two percentage points of the gross salary) to private pension funds and revoking the monopoly of the National Health Insurance Fund and allowing people to pay up to two per cent of their salary (a quarter of the monthly mandatory health care contribution) to private health care insurers.

IME said that the poor handling of government finances by the now-departed Plamen Oresharski government has pushed Bulgaria into a situation where it faces years of budget deficits unless structural reforms were pursued to reduce deficit spending. The think-tank criticised the Budget bill put forth by the Borissov government as not ambitious enough in reducing the deficit in the short and long term.

IME’s draft envisions lower Budget revenues at 30 billion leva, rather than the Finance Ministry’s 30.3 billion leva. On the spending side, the think-tank’s proposal is to cut government expenditures by about 1.4 billion leva (from 31.84 billion leva to 30.47 billion leva), resulting in 1.8 per cent deficit, compared to three per cent deficit in the Budget bill.

(Photo: Michael Faes/sxc.hu)

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