29TH OF MAY – Tax Freedom Day in Bulgaria

29^th of May 2008 is the day of freedom from Government intervention (Tax Freedom Day) in Bulgaria during this year. On this date we mark the day on which the people, figuratively speaking, stop working for the Government and begin to work and earn for them.

It means that if the entire income of the taxpayers from the beginning of the year up until now was taken by the Government until it covers the forecasted budget of treasury, 29^th of May would have been the first day during which the income of the people would have remained in their own pockets! 

Although the 10% personal income tax was introduced in 2008 (which is effectively reducing the average income tax of the people) and the decrease of the social payments at the end of last year by 3 percentage points, this year we are celebrating a day later than last year. "That means the Government intervention in the people's lives is not decreasing, but only gets different form and size" stated Ms. Adriana Mladenova, senior economist with the Institute for Market economics, "The redistribution of income through the budget remains high and even increases" added Mr. Peter Ganev, economist with IME…

Figure 1: Tax Freedom Day in Bulgaria for the period 1998-2008

Source: IME based on data provided by the Ministry of finance

(The data for 2008 are forecasted on the basis of the budget for the year, while the data 1998-2007 is based on the actual budget results)

A person needs on the average 150 days to workout his payments to the state budget during this year in the form of taxes; fees etc. (see Figure 2).

From the point of view of the different types of taxes:

• 48 days – we work to pay the due VAT on the goods and services we consume.
• 28 days – to pay the pension and health insurance payments.
• 26 days – to pay the direct taxes (personal income tax and corporate tax).
• 23 days – for excise tax.
• 25 day – for other income and in the form of fees, custom duties, etc.

Figure 2: Days during which we work for the various revenues to the budget (150 day total during the year)

The day of freedom from Government intervention is celebrated in many countries around the World, but the differences in the ways of tax collection and categorization of the data for public finances make the comparative analysis very difficult.

Here is some interesting dates, when the various countries celebrate the freedom from taxes in 2008 (Tax freedom Day)

For more information:

Adriana Mladenova, senior economist

Peter Ganev, economist

Institute for Market Economy

02 / 952 62 66, 952 35 03

E-Mail: [email protected]

Internet site: www.ime.bg