June 1 2010 is the day on which we will stop working for the state and start working for ourselves – more precisely at 16 hours and 23 minutes on Tuesday (1 June 2010). In 2010 Bulgarians will work for 5 months to pay various taxes and duties, i.e. to fill state treasury. The so-called “Tax freedom day” in recent years occurs at the end of May but in 2010 it will move to June.
During the week There was active discussion during the week whether and how to reduce the VAT in Bulgaria: a more drastic 2-percent reduction from the next year or 0.5 percent every 6 months? The news for lowering taxes should sound good, but in case there is an alternative that is far more attractive. If we tear down taxes, then let us focus on the most problematic ones, namely those on labor.
This week the Bulgarian President became spokesman of the creeping rehabilitation of the “virtues” of budget deficits. It seems that the Prime Minister and his colleagues see political advantages in this idea and are keen on softening the fiscal policy too. These populist positions have always easily found support in our society and have always led to heavy economic consequences. In today’s circumstances they directly undermine the stability of the currency board, which is the single sensible consensual decision in Bulgarian economic policy in decades.
This made us set up an alternative “Independent Pension Reform Council” in which leading economists will take part. The Council’s goal will be to develop a real pension reform that will secure stability and sustainability as well as choice, when and under what conditions the employees will retire and what insurance contributions will they pay.
The Institute for Market economics started a new campaign at the beginning of 2010, attempting through observation and analysis to asses the transparency, soundness and efficiency of public expenditures. The long term objective is to reduce the cost of government and more freedom for citizens.
One of the most widespread misconceptions in the modern history of the world is that the state should and can interfere in the activities of entrepreneurs and to assist business. Often, the government does it through artificially created organizations, giving them a unique and monopolistic power over many aspects of the economic life in the country.
The initiative for reducing the administrative burden started back in 2007 after the suggestion of Commissioner Gunter Verheugen (European Commission - Enterprise and Industry). At the same time the European Commission identified the current superfluous legal regulations and in January 2007 suggested an ambitious program for reducing the unnecessary administrative burden on the business in the EU. In march 2007 the European Council approved a decision that the burden originating from the European legislation, including the national acts aiming at its implementation or transposition, should be reduced by 25% by 2012. The Council urged the member-states to simplify their national legislation aiming “relatively similar goals”.
... The BDB cannot guarantee profitable projects respectively the finances received and lent from the pension funds may never come back. In this case the funds will either loose their money (savings of all insured people!) or as this is a state controlled bank, after the money sink in opaque projects, they will be refunded by the budget or the fiscal reserve. So, it is most possible to have a net loss while the only winners will be the project contractors.