Open Letter Regarding the Necessity of a Decrease of Taxes

TO: Milen Veltchev, Minister of Finance of Bulgaria
CC: Simeon Saxe-Coburg-Gotha, Prime Minister of Bulgaria
 

Open Letter

Regarding the necessity of a decrease of taxes

 Dear Mr. Veltchev,

Like you we want the Bulgarian economy to develop rapidly and the prosperity of the Bulgarian citizens to grow. Just because of that reason we want to turn your attention to the crucial importance of a tax reform, composed of a tax decrease.

        The taxation is directly connected to the incomes of the individuals. The lower taxes leave more funds in the hands of these people that earn their incomes through initiative, skills, entrepreneurship and hard work.

The taxes affect the pace of the economic development. The low tax rates give way to possibilities for more local savings; increase the effectiveness and volume of investments; and attract foreign capitals. They also increase the incentives for work, favor the entrepreneurship and risk taking. The low taxes decrease the price distortions and increase the effectiveness of the economic system. All these effects of the lower taxes increase the economic growth, employment, productivity and prosperity.The low tax rates decrease the incentives for tax avoidance; reduce the corruption; lower the share of the gray economy and increase the tax collection. They also significantly simplify the procedures and reduce the administrative cost for tax collection. That is why a significant tax cut can lead to increased revenues in the government budget – that is also seen in the experience of other countries.During the last years the revenues in the government budget are exceeding the forecast. On the other hand, there are possibilities for optimization of the budget expenditures or for slowing their rate of growth. Moreover, because of the requirements of the European Union the indirect taxes are increased every year. All that shows that there are possibilities for a decrease of the direct taxes.

With regard to the beginning of the budget procedure we believe that it is necessary significantly lower taxes to be enacted from 2005. In our view it is appropriate and absolutely possible a uniform tax rate of 10% to be introduced for all direct taxes – the income tax, the corporate tax and the social security tax. Such tax cut would favor all the Bulgarian citizens not only in the short-term, but also in the long-term period.

Sofia, March 19, 2004Sincerely,