Prof. Garabed Minasyan before FACTS: I think that the current budget will be extended

Minimum salary of BGN 1,077, salary growth of at least 10% in all budget areas and a more significant increase in income in education, healthcare and the Ministry of the Interior. These are part of the proposals in the 2025 budget. This, of course, caused a lot of comment. What budget should we expect… Macroeconomist Prof. Garabed Minasyan.

- Prof. Minasyan, next year's budget does not foresee an increase in social security contributions, the removal of covid supplements to pensions and an increase in taxes such as corporate tax and personal income tax. Should that reassure us?
- The condition “soothes“ does not fit the described situation. According to the information currently available, things look as you describe them, which means that there will be no restructuring of taxation ie. the tax burden will continue to be borne mainly by the low-income part of the population. This is not good news. It would be reassuring if the government committed to significantly reduce the income gap in society, which is the largest in the EU. This government does not make such a commitment, which is bad news.

- In general, how do you view the big picture of the budget. On paper, it sounds well written, but in reality what will happen…
- “The big framework of the budget“ it continues to be virtual and mysterious. Everything about the Bulgarian budget 2025 is still up in the air, with scattered hints. It shouldn't be like that. Apparently, the government thinks that in this way it will manage to break through somehow, between the drops, hastily and under the pressure of time, immature ideas, following the momentum and without assuming decisive responsibilities. This has already been permanently established as the style of our governments regardless of how they were formed. All of us, the entire Bulgarian people, must be clear that every single government of the Republic of Bulgaria is a full-fledged government and must bear all kinds of responsibilities regardless of how it is formally labelled.

- About 9 billion are invested in the budget. BGN more, of which about 3.9 billion BGN could come from a special one-time measure for voluntary payment of liabilities to the treasury. How will people be incentivized to pay taxes…
- I refuse to accept the wording “voluntary payment of liabilities to the treasury”. I pay my debts to the treasury not voluntarily, but because I am obliged to do so under the threat of a significant administrative penalty. And because I know that if I don't do it, the tax officials will discover my default and sanction it. If I can save a penny from that kind of obligation without incurring a corresponding penalty, I will.

The presence of such a wording means that the government officially declares its inability to conscientiously and according to the requirements of the law fulfill its obligations.

In such a case, the government should be sanctioned and replaced with one capable of fulfilling the duties required of it.

- We are talking about more money in 2025, and 2.829 billion BGN is the budget deficit at the end of September. How does this happen?
- Budget “deficit“ not a dirty word. The problem is what the cost overruns are used for. If they contribute to the acceleration of economic dynamics and to a permanent increase in the general well-being of the population, then the deficit is good. The master is in using other people's money in his own interest. All major production and infrastructure projects (including in our country) are carried out using loans and mobilization of free capital. However, if overspends are used for "Belene" type NPP projects; when corrupt practices abound, then things are bad. It is a bad idea to eliminate budget deficits to reduce corruption. All major robberies are committed using high-powered cars, but no one has been born who would suggest stopping the production of high-powered cars in order to reduce major robberies.

- Are we used to spending more…
- Getting used to bigger meals happens quickly and imperceptibly becomes a common practice. All the more so when direct cross-country comparisons within the EU affect mentality. That's how it should be. What each one of us needs and is right to know is how the possibilities for painless higher levels are formed. These possibilities are in ourselves, but also in the way society is managed as a whole. Decisions about the functioning of society are made by politicians, and the people determine who the politicians should be. This is why you can't arrogantly sidestep politics – you chase her through the door, and she comes in through the window, seeps through the cracks. Good macroeconomic policy creates conditions for efficient use of individual opportunities, stimulates them, while bad policy “eats“ winning odds.

- The topic of increasing taxes has been brought up in full force, and we are already seeing resistance fighting in various quarters. But perhaps raising taxes from an official cabinet is the most painless from the point of view of politicians. No politician wants to say I'm going to raise taxes…
- At the present moment, the problem of restructuring the tax burden should be discussed, not its increase. The management community misuses the term “scaling“ of the tax burden – it should be like that, but not for everyone, but for those from the upper income bracket. This is the part of the population that owes the most to quality public services and should pay more – both absolutely and relatively.

- The minimum wage is raised to BGN 1,077 from January 2025, and pensions for the next year will continue to be paid with the covid supplement… Are we making these 1077 leva real…
- The minimum wage in our country is the lowest in the EU – only EUR 477 (2024, Eurostat). Next in line is Romania with EUR 743. Bulgaria also lags behind almost all Balkan countries – only in Albania it is smaller – 392 EUR. What a Bulgarian government is obliged to declare before the entire Bulgarian people and take the relevant responsibility is: Until when will Bulgaria drastically lag behind in this indicator, not only in the EU, but also on the Balkan Peninsula? Are we doomed to be eternal tailgaters? The vision of our governments does not reach there (yet), but the Bulgarian people must force them to see even there.

- There is talk of the possible imposition of a tax on the excess profits of commercial banks. What will this bring us?
- The net profit of commercial banks in our country in 2020. is 815 million BGN, and three years later (2023) it is already 3,417 billion. leva. For the last three years, the net profit of commercial banks in our country has grown 4.2 times! At the same time, the tax that commercial banks pay to the treasury is 10%! As sung in a popular pop song: “It ain't bad at all”. However, the question is not only about the profit of commercial banks and the restructuring of the tax burden should affect not only the banking system.

- Do you expect us to have a new budget, or is it more likely that the actions of the current budget will be extended in the next year 2025?
- I think that the current budget will be extended. What is much sadder is that, most likely, the discussions in the National Assembly will not be substantive, with a view to following and adhering to a modern philosophy for the formation and use of the state budget, but will be reduced to pulling the rug until it is completely torn.< /p>