New temporary coalition in Parliament managed to keep the country’s flat tax rate intact, in spite of the attempts of the leftist forces. Maintaining the 10-percent rate became possible with the voices of MPs from the ethnic Turk Movement for Rights and Freedoms (MRF/DPS) which supported the ruling coalition GERB – Reformist Bloc in parliament after the two pro-government formations, ABC and Patriotic Front, voted against its preservation. They, as expected, approved the proposal of the socialists and Ataka for the reintroduction of progressive taxation.
Without DPS, the flat tax would already have been history and the government’s first reform would not have been in the direction that the Reformist Bloc and GERB declared, after the voting pointed out marked Yordan Tconev of DPS. So for the first time DPS actually showed its frantic desire to support the Government at the expense of participation in the mechanisms of power, and probably not be prosecuted for past sins. Ttsonev again repeated his thesis of a value-linked majority in Parliament.
The proposals of the socialists and Ataka were made immediately after the establishment of the 43rd National Assembly. They were among the pillars designed to highlight their opposition and targeted social policies.
The project of Ataka provided for the abolition of the flat tax and the introduction of seven rates of annual income taxation. Exempt were proposed to be the income of the poorest – up to 4800 levs in income per year.
As the Banker weekly has already written, the proposal of the socialists was incomes up to the minimum wage – of 340 levs not be taxed, while the 10% rate to be kept for incomes from 340 levs to 1000 levs per month for the amount over 340 lev. Incomes from 1000 to 2000 lev had to be taxed by 66 lev plus 12 percent of the amount exceeding 1000 levs, which means a lower tax rate than the current 10% at the moment. Incomes from 2000 to 5000 levs – were supposed to be taxed by 186 lev plus 15 percent of the amount exceeding 2000 levs and those over 5,000 levs – by a sum of 636 levs plus 20 percent for going above, according to the income pyramid of the socialists.
Socialists also offered the monthly tax base to be defined as the taxable income is reduced by the sum withheld by the employer for compulsory social and health insurance.
In the last term, when they were in power, the socialists failed to negotiate it with their partners from the MRF to remove the flat tax, which was introduced at the time of the coalition government led by Sergey Stanishev.
Martin Dimitrov of the Reformist Bloc named the proposals of the socialists as populist ones as in the last term of office of their Cabinet they were able to introduce progressive taxation, but have not done so, and now in opposition they offer it. In his words, the revenue from flat tax has exceeded forecasts. This is the only tax, the income from which grows even in a crisis.
"Even your favorite Russia has a flat tax", said Martin Dimitrov to the socialists.
