On the eve of the discussion of the state budget, the tension between the employer organizations and the government is growing. Business representatives warn of the risk of a higher insurance burden, demotivation of workers and a potential withdrawal of investors. According to them, the set revenues are unrealistic, and the expenses - excessive, which could lead to accelerated indebtedness of the country. Vasil Velev, Chairman of the General Assembly of the Association of Industrial Capital in Bulgaria, spoke to FACT.
– Mr. Velev, how do you view the words that this is the only budget that can be proposed by the government…
– Of course, this is not the only thing that can be proposed. Employers' organizations made constructive suggestions on how to improve the draft budget without raising taxes, social security contributions, or digging into the pockets of 2 million working people, while at the same time not worsening the balance. That is, we made three proposals for changes in the revenue side and several in the expenditure side.
– And is there any audibility for them?
– It seems that there is no audibility. This rush to adopt the budget, this attempt at formal discussion in the Tripartite, in which we refused to participate, speaks for itself. Obviously, no one is listening. No logical arguments or good proposals are heard at all. Only the street is heard. If there are protests, the problem is solved somehow.
– If there are no protests, there is no problem. Is that how it turns out?
– No, the problem remains and grows, and one day it will explode.
– There is a lot of discussion about the dividend tax – it was also a luxury tax, because people bought luxury cars and yachts like that…
– For example, from the point of view of luxury consumption – yachts, airplanes, etc.? I don't know anyone who has bought a yacht or airplane with a dividend.
– But we heard that luxury is "hit" in this way…
– That someone who has made a profit and distributed dividends has bought a yacht or an airplane with the taxed money? That's not serious. We hear how we will consolidate luxury consumption. It is not consolidated in this way. Yachts and airplanes are not bought by individuals, but by companies. In return, we will also drive the few investors out of the capital market. In return, we will also pick pockets of small investors - those who own minority stakes in enterprises, workers, employees. These are hundreds of thousands of people who receive even a small dividend.
– What will be the effect of a dividend tax on the treasury?
– In our opinion, revenues will decrease, not increase. Everyone sees, knows and says this. This is also because of the dividend withdrawn in advance this year, but not only.
– What is the main problem with the budget in your opinion?
– The bigger problem, in fact, is the growth of the insurance burden. The growth of insurance is digging into the pockets of everyone working in the private sector of the economy.
– How will this affect a family?
– Roughly speaking - 50-60 leva per month will cost a person with an average net salary of about 2,000 leva. And this is only for the next year with a 2% increase. For both of them, the income will be about 100 leva less.
– And the next one?
– The next one (ed. - 2027) with another 1%. Thus, the tax on labor (the social security burden) will increase from 53% to about 58%. In order to pay 100 leva net, these 53% social security contributions and tax must be paid now. This makes an increase from 53 to 58 leva per month in 2027. Thus, a larger amount will be taken out of the mass of money allocated for salaries to go to the budget and from there mostly to sectors such as defense, the justice system, the prosecutor's office, and the Ministry of Internal Affairs, where salaries are growing by double digits. Last year they grew by 50%, this year - by another 12%. Some state commissions are again at 50%.
We have a doubling of salaries in some repressive structures in two years, while working people who fill the budget with their taxes are impoverished.
That is, in order for the rulers to be loved by, say, 200 thousand people, they will be “hated“ by 2 million people. In order for the rulers to please 200 thousand people, they will impoverish 2 million! That's the arithmetic. People who don't understand the budget now will understand it when they see their pay slips after the New Year – in February, when they will receive their salaries for January.
– Are the revenues set in the budget feasible in your opinion?
– It is not feasible. There is no way VAT can grow by 1/3. This year it grew by half less than what was planned. The excessive spending that is being committed does not correspond to the state and growth of the economy. This leads to continued indebtedness at a very rapid pace. Next year we will pay twice as much interest on the state debt as we paid last year.
In two years we have a doubling of interest payments.
Billions of levs will go to debt service instead of education, healthcare, culture, sports.
– Can we say that we just like taking on debt? Or are we put in such a situation?
– Apparently, certain rulers believe that we are "getting by" since we do not participate in this financial orgy that has engulfed the Western world - I am talking about indebtedness.
- Living on credit?
- But this is not safe. It will soon happen that they will not give us loans, and at some point these loans will be required. Then an outsider will come to manage public finances, since we cannot manage them. We have seen this movie, but our memory is apparently short - that was the case during the state bankruptcy in 1996-97, that is what happened in Greece, that is what is happening now in Romania. Incomes are being frozen, pensions and minimum wages are being reduced, as happened in Greece. This will happen in Bulgaria tomorrow.
And today we see a great injustice: people with higher education, qualifications and specialization cannot receive 2-3 times less than people with secondary education in the repressive apparatus.
Society will not tolerate this injustice.