Economic Policy Review ISSN 1313 - 0544

Make Love, Not Politics

Author: Metodi Lazarov / 27.06.2007
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The government approved the national plan for demographic development which is largely based on the respective strategy of the demographic processes in Bulgaria for the period 2006-2020, prepared by the Ministry of Labour and Social Policy. Just like many other important governmental documents, the plan is not freely accessible in Internet as the website of the Ministry only provides with a short resume from the press-center, reformulating the main aims of the Strategy. Even in the couple of lines, published in Internet, the state employees have not managed avoiding the long used from the era of communism and proved to be illogical and utopical means of stimulating the demographic situation.

Competition on the labour market, provision of full employment, risk of unemployment, low income for various labour categories are some of the main reasons for low birth-rate according to the Ministry. However, the strategy does not make it clear whatsoever whether a flexible labour market is correlated to higher birth-rate or babies shall be born only if the state has secured for them a job to take later on. The logic of Ministry is obvious since Emilia Maslarova has previously pleaded for an increase of minimum wage, steeper tax base, significant social securities and larger state interference in our personal lives. Such a policy is one of the many reminiscences of the socialist government for past times and an effective hand-brake to the development of the Bulgarian market economy. The plan mentions that good health and accessibility to education also are vital factors for birth-rate. In these sectors of the economy, however, seem to appear no problems at all since the Strategy attempts convincing that the population has a "favorable educational structure" and "satisfactory overall educational level" while the healthcare system has been long ago restructured and achieved better efficiency with the only problem in sight being its financing.

The plan envisages single and monthly financial assistance at the birth of a baby, aimed financial aid to students and other categories. The all-powerful state desires being in charge of redistributing financial resources from certain society groups to others while fulfilling a one-man role by determining from whom to take and to whom to give. However, the rationally and long-term thinking young people would be much more encouraged to raise children by lower taxes and higher disposable income which does not get acquired by the state but remains in their proper hands so that they could plan on their own for themselves. In the end, the current financial assistance is way too low and in reality, its efficiency leans to zero unless giving birth is used as a source of income by large families which has lately turned to be a popular way of raising money.

Even lower taxes may not ensure higher birth rate when the population disposes with low income. A sharp increase of income demands rapid economic reforms for higher economic growth which would also increase labour productivity and respectively, the level of income. Such policy is, unfortunately, right the opposite to what the Ministry plans which is "stimulating equality between the sexes in terms of professional realization as well as according to splitting the chores in raising and education the young generation. The government indirectly proposes discrimination policy while also trying to advise (and why not ordering) how to deal with our personal life.

Approximately 400 million leva cost the motherly instinct of minister Maslarova to the taxpayers, which is 30% of the revenue from the revenue from direct taxes. If we take that tax income change in a constant rate and in a direct ratio to the tax base, we are experiencing at least a couple of percentage points higher because of the policy of the Ministry. These calculations do not even include the possible revenue from undeclared income which should rise in absolute values at a lower tax base. In that case higher taxes seem pointless and unnaturally provide jobs to state employees.

The taxpayers also contribute to the financing of bombastic strategies by minister Maslarova. The main document consists of 76 pages and formulates "the state answer to the demographic collapse throughout the country", which needs to be solved by "means to encouraging the birth-rate, decreasing infant mortality, increasing the average life expectancy, creating premises to inverting the migration processes and ameliorating the quality characteristics of the human capital". It is especially convenient to write long-term strategies which are not planned to be completed during the current mandate of the government.

Minister Maslarova praises social policies, left from the era of communism, and the tax on bachelors which has not been applied since 1990. However, greater impact on birth-rate would be caused by transparent and effective judicial system, state's withdrawal from the economy, modern education and greater personal freedom. If there were brighter future ahead, defined by these factors, there would also be higher standards of living and more Bulgarian babies.