VAT will not increase, Bulgarian PM confirms

VAT will not increase, Bulgarian PM confirms

Bulgaria's Cabinet agreed that value-added tax (VAT) will not be increased, and the country will instead seek to deal with its financial troubles through reforms and savings - a route that Prime Minister Boyko Borissov described as "the more difficult path". The Cabinet decision follows several days of twists and turns on the issue of increasing VAT, with Borissov having said towards the end of April that the tax would have to go up to plug a "big hole" in the Budget because of declining revenue. The proposal drew strenuous complaints from the private sector, economists and trade unions as well as public expressions of reservations by Finance Minister Simeon Dyankov and Economy Minister Traycho Traykov, leading Borissov to say that he had never been keen on increasing VAT. Minister Simeon Dyankov took to the tripartite council on co-operation - the body made up of representatives of Government, unions and business - a proposal that instead of increasing VAT, more extensive cuts be made to spending on state administration. Bulgarian National Television reported Borissov as telling a post-Cabinet news conference that there would be rapid structural reforms in health, education, pensions and administration, while the Government expected to make an additional 500 million leva by the end of 2010 from excises on tobacco, alcohol and fuel. If need be, excises would be collected by putting "a policeman at every street kiosk selling cigarettes and alcohol". He said that a side-effect of the crisis hitting Bulgaria had been an increase in savings by people, injecting five billion leva into banks since the start of 2010. Cost-cutting by the Government is expected to yield a benefit of 900 million leva by the end of 2010. Borissov told the news conference that there would also be benefits from the introduction of specialist courts and amendments to the Criminal Procedure Code.

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