Time for resolute anti-crisis measures – position of the BCCI

The question of raising the VAT is a key issue for the economy as it brings 40 % of the budget incomes and nobody should be indifferent, including the BCCI as the biggest nationally representative employers’ organization – said BCCI President Tsvetan Simeonov.

The frequent change in positions and intentions of reform in the taxation policy is not a good signal neither to the local business nor to the potential investors.

A higher VAT will surely lead to a growth in the prices although a decrease in this tax will not necessarily cause a decrease in these prices . The result will be further shrinkage in consumption and continuing impoverishment of the Bulgarian citizen as well as blocking more resources of the companies beyond the normal production-and-commercial process.

From our permanent contact with the companies we know that this will cause migration of a new group of companies to the gray sector, at that precisely when we are trying to bring them to the light. A company passing over to the gray sector means less incomes from VAT and also relates to lower insurance payments on corporate taxes, and in general a negative effect .

Analyzers who predict a new shrinkage in the number of VAT payers are right. According to the BCCI, the effect from the Government’s not paying its debts to the firms will continue. According to the agreement with the governmental team in the council for tripartite cooperation this full-size payment was to take place by mid-June instead of having a 7% decrease with the disbursement term becoming unknown. What is more, a list of the state’s obligations payment to the companies had to be prepared in transparent manner. Our members by regions signal that this list with companies enrolled and omitted was drawn up by use of non-transparent criteria.

We recall that declaring a measure temporary might have a negative effect on the economy when the business would not be able to plan neither its incomes nor its payments to the budget .

Since negation is not the best contribution to the economy or cooperation with the authorities, I would recall that apart from tax increase there is yet another way of combating the crisis, namely - sharp reduction of budget expenses. We shall propose for examination the data on public expenses in the budget. By statistical information in 2008 these were 7.4 billion, in 2009 – 6.8, and for 2010 a little more than 8 billion is envisaged. An increase in public expenses is inadmissible in crisis time. Two more figures – in 2009 the redistribution role of the budget was reduced to 38 percent, in 2010 it is already 41.3 by the budget available. Therefore, the idea of sharply reducing entire units in the administration in order to have a sharper decrease in public expenses should not be further avoided. Contrary to the unclear effect of the idea of raising the VAT, such move is immediately accomplishable, it rests with the public administration.

This is a crucial moment and the time has come for resolute steps . Hesitant measures lead to unstable results and the threat of subsequent periods of adverse events in the Bulgarian economy .

At present, the BCCI has released a study to some thousands of its members and hopefully by Monday early afternoon we shall be able to provide more accurate percentages of approval or disapproval regarding the measures as mapped out in the taxation sphere.