Bulgaria King's Party Backs Govt Anti-Crisis Measures

2010-03-28

Bulgaria's government plans to increase the value-added tax by 2 percentage points to 22 percent has been conditionally backed by the centrist party of former king Simeon Saxe-Coburg, junior coalition member in the previous Socialist-led cabinet. “The hike in VAT tax is an anti-crisis measure of last resort and NDSV party will support it only if it is coupled with a measurable decrease in the social securities,” economist expert and NDSV member Vladminir Karolev said on Sunday. He went as far as to suggest that the value-added tax is upped, while the social securities are downed by 3 percentage points. “Bulgaria won't be able to crawl out of the crisis without a serious cut of about 10% in the salaries of state officials,” Karolev said, citing as examples the recovery of Ireland and Latvia, which undertook similar measures to combat the crisis. The other anti-crisis measures, proposed by NDSV, include the freezing of pensions by the end of the year, a cut in the subsidies of state companies, which have already been voted for in the budget for this year and tax reliefs for the business. Still Karolev did not shy away from criticizing the center-right government of the GERB party for being too uncertain and erratic as far as its anti-crisis proposals are concerned. Bulgaria's new center-right government plans to introduce a new tax on luxury goods, increase the value added tax to 22 % and cut public servants wages in a bid to help fight the economic crisis and keep down the fiscal deficit. It is part of a package of new measures, which also include floating minority stakes in state-owned companies and a possible bond issue. The government is expected to agree with the trade unions and the union of employers a final package of nearly 50 steps to combat the crisis. Representatives from all business sectors have cautioned that the hike in the value-added tax in Bulgaria should be a last-ditch measure that should only be introduced together with an overhaul in government expenditure.