Bulgaria’s ruling majority proposes measures to counter impact of inflation
Zero-rated value-added tax (VAT) bread for a year and significantly increased pensions are among the proposed measures announced by Bulgaria’s ruling majority on May 18 following a council meeting coalition the day before to discuss the measures to be taken to counter the effects of rising inflation.
“The aim is to support those most vulnerable to the effects of inflation, young families with children, as well as to focus on fuels and electricity,” Prime Minister Kiril Petkov said during a briefing.
The measures amount to a total of two billion leva, Petkov said.
Some measures will require legislative changes and it is planned to include them in an update of the Bulgarian national budget, which will be presented to Parliament in the middle of the year. Some will be in effect from July until the end of the year, and others in effect for a year.
According to the ruling coalition, pensions will be updated from July 1 by an average of 20%, instead of the current 6.1%.
The “Covid supplement” of 60 leva per month for pensioners will be integrated into pensions permanently, while there will be individual adjustments for categories of pensioners.
The proposal is that from July 1, the minimum pension will be 467 leva per month. According to Petkov, this is a 55% increase from the minimum pension a year and a half ago.
The pensions of 770,000 pensioners will be recalculated from October 1 in accordance with the so-called “Swiss rule”.
The pension ceiling will become 3400 leva, the same as the maximum income insurance.
For a period of one year, the VAT on bread will be reduced to zero percent, while during the same period, the VAT on wine and beer will be restored to its previous level of 20 percent.
Also for one year, VAT on heating and hot water will be 9%.
VAT on natural gas for end users and households will be reduced to 9% for one year, while VAT on books will remain at 9%.
The ruling majority proposes to remove excise duties on certain energy sources – electricity, natural gas and methane.
It will be “recommended” to the energy regulator to have dual tariffs for electricity, water, heating and gas, based on consumption per household, with the aim of introducing a reduced tariff for a less consumption.
There is also a compensation proposal for high fuel prices.
Until the end of 2022, individuals – but not companies – will receive a discount of 25 stotinki per liter for A95 unleaded gasoline, diesel, methane and propane-butane.
Assen Vassilev, deputy prime minister and finance minister, said there would be no limit on the quantities purchased, but there would be restrictions on the type of fuel for which the discount is applicable. It would be given only for A95 without additive and diesel without additive.
It was not immediately clear how the fuel rebate program would be implemented.
Vassilev said this would be discussed with the petrol stations, either by issuing an invoice to an individual or by the petrol station notifying the National Revenue Agency.
The package of anti-crisis measures also includes raising the bar for mandatory VAT registration from 50,000 to 100,000 leva.
The government intends to reduce the interest rate for overdue payments to the state, municipalities, utilities and others by up to 8%.
Consideration is being given to taxing excess profits from electricity to compensate non-residential consumers.
To support families with children, the package plans to increase the tax relief for children from 4,500 to 6,000 leva per year as a long-term measure, and it will be possible to use it every three months during the year. ‘year. Petkov said that in other words, families with children could immediately benefit from this tax relief.
The government will also increase the annual food voucher quota for employees from 1 billion to 1.2 billion leva.
The ruling coalition’s announcement came on a day when many protests were taking place in Bulgaria, mainly over rising energy costs and other cost-of-living issues.
The proposals were announced the following day, as The Sofia Globe reportedthe National Institute of Statistics has released figures showing that Bulgaria’s annual consumer price index (CPI) recorded inflation of 14.4% in April 2022, the highest annual increase in consumer prices country’s consumption since July 2008.
(Photo: Frances Magee/freeimages.com)
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