Bulgarian Municipalities to hike Taxes Amid Inflation and Outdated Assessments

Bulgarian municipalities are preparing to increase local taxes and fees for the first time since 2012, citing a combination of soaring inflation and significantly outdated property valuations. The move, expected to take effect in 2025, will impact building taxes, motor vehicle taxes, and garbage fees.

Silvia Georgieva,chairperson of the National Association of Municipalities in Bulgaria,explained the necessity of the increases in an interview with NovaNews. “Building tax, motor vehicle tax, and garbage tax have not been changed as 2012,” she stated. “It has been 12 years since the last place tax optimization. There are two factors that make it necessary for them to have new conservatively increased rates next year.”

Georgieva highlighted inflation as a primary driver. “Over the last 12 years, the costs of all the consumables we use to provide municipal services have increased significantly, and the increase in the minimum wage is key,” she explained.”If in 2012 it was BGN 380, then in 2025 it will be BGN 1077.”

The second major factor contributing to the tax hike is the unchanged assessment of real estate values since 2007. Georgieva emphasized the vast discrepancy between assessed and market values. “The discrepancy with the market values is tens of times,” she pointed out. “Such as, there is no house near Sofia, the market price of which is around 1 million euro, to have an annual tax of BGN 30.”

Georgieva also addressed the financial constraints facing municipalities. “Municipalities are financed both from transfers from the central budget and from own revenues, and we in 2025 again we go in without a budget,” she commented. “Municipalities’ income from local taxes is only 20%. Municipalities are certainly taking a conservative approach to updating taxes.”

While the specifics of the tax increases remain to be finalized, the proclamation underscores the challenges faced by local governments in balancing budgets amidst economic pressures. The situation in Bulgaria mirrors similar challenges faced by municipalities across the globe, highlighting the need for regular reassessments and adjustments to local tax structures to maintain essential services.

This article is brought to you by world-today-news.com

Bulgarian Municipalities Face tough Choices: Tax Hikes Looming Amid Inflationary Pressures

With inflation soaring and property valuations significantly outdated, Bulgarian municipalities are preparing to raise local taxes and fees for the first time in over a decade. This move, expected to take effect in 2025, will impact building taxes, vehicle taxes, and garbage fees, prompting concerns from residents and businesses alike.

Facing a Budgetary Crunch

Senior Editor: We’re joined today by dr. Maria dimitrova, a leading expert on local goverment finance and Professor of Economics at the University of Sofia. Dr. Dimitrova, can you shed some light on the factors driving these proposed tax increases?

Dr. Dimitrova: Certainly. Bulgarian municipalities are caught in a difficult bind.



Years of stagnant local tax rates combined with a sharp rise in the cost of providing essential services, like waste disposal and infrastructure maintenance, have squeezed municipal budgets to the limit. Adding fuel to the fire is the notable increase in the minimum wage, which further increases personnel costs.

Outdated assessments: A Widening Gap

Senior Editor: you mentioned outdated tax rates. Can you elaborate on the issue of property valuations?

Dr. Dimitrova: Absolutely. The last comprehensive reassessment of property values took place in 2007. Since then, market values have risen dramatically, notably in urban areas. This creates a massive discrepancy between what many homeowners are paying in property taxes and the actual market value of their assets. This isn’t just unfair; it also deprives municipalities of crucial revenue needed to invest in public services.

Balancing the Books: A Necessary Evil?

Senior Editor: The proposed tax increases are sure to be met with some resistance. How do you see this playing out politically?

Dr.Dimitrova: It’s a tough situation for local officials. They are walking a tightrope.

On one hand, they are facing insistent calls to maintain and improve services, from road repairs to public healthcare. On the othre hand, they are under pressure to keep taxes low.



Ultimately, I believe that these increases are regrettably necessary to ensure the long-term financial stability of Bulgaria’s municipalities. The hope is that they will be implemented in a fair and clear manner, with sufficient safeguards for vulnerable populations.

Looking Ahead: the Need for Reform

Senior Editor: What long-term solutions do you see for addressing these challenges?

Dr. Dimitrova: Regular reassessments of property values are imperative to ensure that the tax burden is fairly distributed. Moreover, Bulgarian municipalities must explore innovative revenue sources and look for efficiencies in service delivery to lessen their reliance on property taxes alone. This could include public-private partnerships for infrastructure projects or adopting more lasting waste management practices.

Thank you for sharing your insights, Dr. Dimitrova. This certainly is a complex issue with far-reaching implications for Bulgarian citizens.