10% Profit Tax - the Result of Eight Years of Efforts of the Institute for Market Economics
Yesterday’s achievement of the deputies has its prehistory. It is not their doing, but a result of the demand for such change in the society. A leading role in forming this demand has played our Institute. Here is a short overview of these efforts. Present: From 2007 profit tax is set at 10%. The Institute for Market Economics has been one of the major upholders of low taxes since its establishment in 1993. This is proved by the attempt for assessment of tax reforms in Bulgaria, Slovakia and Poland in 1997-1998 which also included testing the perspective for proportional (flat) low tax and by the permanent campaign since 2002 for a 10% proportional and generally applied tax. This work has also been a major priority of IME and we have been popularizing the idea through analyzes, suggestions and publications.
Bulgaria - An EU member from 1st January 2007
On 26th of September 2006 the final Monitoring Report of the European Commission on Bulgaria was released with the statement that Bulgaria will become a full-pledged member of the union on 1st of January, 2007. For now there are no protective clauses, but the European Commission has left an open way by declaring explicitly that the strict supervision and control on the areas of concern in the country will continue. Protective clauses in the sphere of internal affairs and judiciary system can be activated later on, and part of the subsidies and money from the Eurofunds can be reduced or declined ex-post, if supervision shows that Bulgaria does not meet the requirements of EU concerning the transparency of the expenditure of public resources, fighting corruption, efficiency and independence of the judicial system.
Europe: Don't Vote with Your Feet
If you are fed up with paying taxes, you'll certainly like the idea of tax competition. It gives the opportunity to escape fiscal pressure from your own government by eventually "voting with your feet" to other jurisdictions with more favourable tax regimes. And it gives strong incentives for governments elsewhere to lower their own taxes. Luxembourg for example is considered as a "tax heaven" in the heart of Europe, benefiting not only European but also world taxpayers.