Insurance and taxes will not rise, pensions in 2025 will be increased by 9.6%
The budget for the next year, it does not foresee an increase in insurance contributions, removal of covid supplements to pensions and an increase in taxes such as corporate tax and personal income tax. The discussed revenue measures, which will be advocated in the draft budget for next year, are expected to bring about BGN 9 billion more to the treasury, of which about BGN 3.9 billion could come from a special one-time measure for voluntary contributions of liabilities to the treasury. This was announced to journalists by acting Deputy Prime Minister and Minister of Finance Lyudmila Petkova, quoted by BTA.
She pointed out that measures expected to bring more revenue to the budget include an increase in the excise tax on cigarettes, amnesty for unpaid debts to the treasury, increasing collections, possibly imposing a tax on the excess profits of banks, restoring the uniform rate of value added tax (VAT) and a measure aimed at voluntary payment of undeclared debts, tax on underground resources.
From the so-called amnesty, taxes and mandatory social security contributions of about BGN 3.9 billion are expected to come to the budget, and from the one-time opportunity to declare previously undeclared income, the effect would be between BGN 500 million and BGN 800 million.
“It is more about voluntary payment of taxes and mandatory social security contributions. The persons who by December 31, 2024 have declared, but have not paid their obligations, if they repay the principal, the interest will be simplified. The biggest accumulation of declared taxes and insurances has been in the last 3-4 years – after covid”, said Petkova, adding that the measure is one-time and applies to all those who have obligations to the budget – individuals, legal entities, state and municipal enterprises.
“Individuals who have not declared their income are given a one-time opportunity to be declared, and accordingly the rate will be higher – not 10 percent, but between 15 and 20 percent,” said Petkova, adding that she would not interest or penalties are imposed.
“Covid pension supplements remain. The new pensions will be according to the Swiss rule, as stipulated – the increase will be around 9.6-9.7 percent,” said Petkova, adding that no increase in insurance contributions is foreseen.
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What are the potential implications of Minister Petkova’s budget announcement on the overall economic growth for 2023?
1. Can you tell us about the key points in Minister Petkova’s announcement regarding the upcoming budget for 2023?
2. What strategies have been proposed to increase revenue and decrease expenditure in the budget?
3. How will the new tax measures, such as an increase in excise tax on cigarettes and a potential tax on bank excess profits, affect different sectors of the economy?
4. What is the purpose of the proposed ”amnesty” program for tax and social security contributions? Have similar programs been successful in the past?
5. Will the proposed measures lead to an increase in the overall tax burden on citizens and businesses, or do they aim to maintain the status quo?
6. What is the significance of maintaining covid pension supplements and how will they be funded in the future?
7. How does the decision to keep insurance contributions stable affect individuals and businesses that are currently struggling with the cost of living?
8. How will the new pension system work, based on the Swiss rule, and what factors contributed to this decision?
9. Are there any concerns about possible negative impacts on the labor market or businesses as a result of the budget proposals?
10. How do you envision the budget process unfolding in the coming months, and what role will stakeholder input play in shaping the final budget?
