Institute for Market Economics

Subsidies and Tax Relief Harm Bulgarian Agriculture

In the last ten years, the share of the agricultural sector in GDP has decreased by five times, despite the sustained growth of the Bulgarian economy. This development is surprising given the active support to sector. Forms of supports to agricultural producers in the period 2001-2007 consist mainly of tax relief and subsidies totaling over 2.5 billion leva.

We will be working for five months for the government even during the crisis

June 1 2010 is the day on which we will stop working for the state and start working for ourselves – more precisely at 16 hours and 23 minutes on Tuesday (1 June 2010). In 2010 Bulgarians will work for 5 months to pay various taxes and duties, i.e. to fill state treasury. The so-called “Tax freedom day” in recent years occurs at the end of May but in 2010 it will move to June.

Social security payments, rather than the VAT

During the week There was active discussion during the week whether and how to reduce the VAT in Bulgaria: a more drastic 2-percent reduction from the next year or 0.5 percent every 6 months? The news for lowering taxes should sound good, but in case there is an alternative that is far more attractive. If we tear down taxes, then let us focus on the most problematic ones, namely those on labor.

On Crafts or the Story of a Shoemaker

One of the most widespread misconceptions in the modern history of the world is that the state should and can interfere in the activities of entrepreneurs and to assist business. Often, the government does it through artificially created organizations, giving them a unique and monopolistic power over many aspects of the economic life in the country.

You Will Watch Them because They are Made in the EU

According to the European legislation, 50% of all the broadcasts on air, regardless whether the channels are private or public, should be produced in the EU. Whether national or European, protectionism suppresses the free market and the competition principle. The media sector does not make an exception.

From Administration to Stagnation (Monsieur Sarkozy's speech in Davos and the Contribution of the ILO)

Recently the French President Nikolas Sarkozy gave his introductory speech at the forum in the Swiss town of Davos. The speech was assessed with different epithets such as „a key one“, „revolutionary“ and „the most socialist speech by a center-right president“. There were several distinguished aspects in his speech: new regulations for the financial sector plus transaction tax known as the Tobin Tax (which was not surprising as Sarkozy withstands his position on bank bonuses from a long time), the creation of a new world monetary order and the formation of some kind of a world government that should be capable of imposing internetional organizations’ decisions to all countries.

The minimum capital requirement has been finally removed

A few weeks ago, a law amendment was passed, which results in a change of the minimum capital requirement for companies to the symbolic 2 Leva (1 Euro)...

Remittances

Part of disposable income in each country comes from funds earned in another country and sent or brought home. The difference between money received from abroad and paid to foreigners determines whether a country is a net exporter or importer of labor. As it could be expected, these flows have the largest positive values (as % of GDP) in less developed countries where emigration and seasonal employment in other countries are most significant.

IME's New Campaign: "State Expenditures in Bulgaria"

The Institute for Market economics started a new campaign at the beginning of 2010, attempting through observation and analysis to asses the transparency, soundness and efficiency of public expenditures. The long term objective is to reduce the cost of government and more freedom for citizens.

Bulgaria – The Country with Two Faces

Undoubtedly, this week was marked by the passions around Rumyana Jeleva’s hearing at the European Parliament. The general conclusion among the media and the public was that the incident is yet another shameful stain on the reputation of Bulgaria to Europe and worldwide. In contrast to the political pratfall in Brussels, Journal this week The Wall Street published a material, which gives Bulgaria’s fiscal policy as an example of the EU and the euro area, which have got in huge budget deficits during the global economic downturn.

Do Not Raise the Deficit*

This week the Bulgarian President became spokesman of the creeping rehabilitation of the “virtues” of budget deficits. It seems that the Prime Minister and his colleagues see political advantages in this idea and are keen on softening the fiscal policy too. These populist positions have always easily found support in our society and have always led to heavy economic consequences. In today’s circumstances they directly undermine the stability of the currency board, which is the single sensible consensual decision in Bulgarian economic policy in decades.

Reducing the Administrative Burden in the EU – It Is Possible!

The initiative for reducing the administrative burden started back in 2007 after the suggestion of Commissioner Gunter Verheugen (European Commission - Enterprise and Industry). At the same time the European Commission identified the current superfluous legal regulations and in January 2007 suggested an ambitious program for reducing the unnecessary administrative burden on the business in the EU. In march 2007 the European Council approved a decision that the burden originating from the European legislation, including the national acts aiming at its implementation or transposition, should be reduced by 25% by 2012. The Council urged the member-states to simplify their national legislation aiming “relatively similar goals”.

IME STUDENTS CLUB

...Almost 100 students from various universities attended the first meeting and took active part in a discussion about the financial crisis, skillfully moderated by our guest-lecturers - Kalin Hristov and Georgi Angelov.