Taxes, transfers, services, banks… The business is worth billions, but what do the numbers show… Iskra Mihaylova, MP from “Vazrazhdane“, speaks to FACT.
- Ms. Mihaylova, how rich we Bulgarians are. Prices in stores are at the same level as in Germany, and even more. Bank fees are also at the same level as in Germany, if we exclude the fees that apply at the EU level. Why is it like this in our country? A market economy or…
- It is difficult to talk about a free market in our country. For decades, Bulgaria and Bulgarian producers and consumers have been hostages of the current government. Economic influence in Bulgaria has been distributed for decades through the governments of the state, but more through the individuals participating in them than through systematic state policy. As for whether we are rich - no, we are not. Some people are rich, according to statistics 6%. On the other hand, 38% of our compatriots admit that they live poor or rather poor. In addition to expensive prices in stores, we are the country with one of the highest VAT rates for food in the European Union - 20%. In other countries, there is a distinction when it comes to certain goods. In Poland, VAT is 23% for goods and services, but there are different rates for different foods - 5% for bread, meat, fish, eggs, dairy products, 8% for goods such as sugar and some spices. In Romania, the general tax rate is 19%, but for food and non-alcoholic beverages it is 9%. In Greece, the standard VAT is 24%, but for certain foods, including bread, milk, meat, fish, cheese, olive oil, vegetables, the rate drops to 13%.
- You recently analyzed the banks' profit from taxes. What do the accounts show?
- The excess profits of banks are an uncomfortable topic for the authorities. But... For 2024, the total profits of banks reach almost 3.7 billion leva. Until recently, they paid a corporate tax of 10%, and recently it was raised to 15%. This happened after an international decision, not in our country. Currently, there is a narrative that should convince us that the sector will already contribute enough finances to the budget after these 5% on its corporate tax. For comparison, the tax paid by the sector for 2024 is 568 million leva after the increased rate compared to about 350 million leva for 2023. It is not a particularly convincing argument for stopping the conversation on the topic.
- I will give you a clear example of what it is like to withdraw money from a bank. You withdraw 5600 leva from a euro account, and the fee is 50 leva…
- The income of banks from fees alone exceeds 1.6 billion. I do not know if most people actually imagine how much this amount is. I will give the following example. The average salary in Bulgaria is 2300 leva. If one person spends an average salary of 2300 leva every day, it will take him approximately 1929 years to spend 1,619,704,000 leva, which is the income of banks for 2024, just from fees. If 10 people spend an average salary every day, it will take them about 193 years to spend it, etc. This money is collected from fees. How do you think this is?
- And this is the income from fees alone. And what is the income from the bank's other activities?
- Their net interest income is over 5.5 billion leva, and their assets are worth over 190 billion leva
- Dimitar Glavchev's office wanted to tax the banks' profits for a moment to patch up the budget. But it quickly gave up. Why? Are the banks that strong…
- Apparently they are that strong. The arguments of the then government for abandoning their intentions were untenable. They withdrew their proposals for taxing the banks' excess profits with the argument that the corporate tax had increased from 10 to 15 percent, even though this had been in effect for months.
- What can the state do in this case? We are a market economy, a free European banking market…
- From “Vazrazhdane” we believe that the excess profits of banks should be taxed, although the Council of Ministers has given up on this. When considering the budget, this will certainly be one of our topics.
- The topic of adopting the euro is a priority for the “Zhelyazkov“ cabinet. From “Vazrazhdane“ you want a postponement. How ready are we as of today…
- Given that several successive finance ministers, including the current one, give different information about the financial situation of the state every other day, what do you think? I think we are not ready, and that the government is unoriented and talks more about political goals, while the economy has remained in the background.
- Now we are waiting for a budget to be proposed that has a 3% deficit. Is this just math, or do you think it's realistic and achievable? - Unfortunately, the heterogeneous ruling coalition is giving mixed signals about the policy it intends to pursue. The rulers have not yet presented their work program. What we hear as requests from GERB, BSP, ITN and DPS are their plans for a 3% budget deficit solely because of the eurozone. However, nothing is heard about the real problems of Bulgarians. Meanwhile, our purchasing power is decreasing every day, we are getting poorer and it is becoming increasingly difficult for us to afford to cover our basic needs for food, heating and medicine, and tens of thousands of Bulgarian households often have to make the difficult choice of what to do without.
According to NSI data, in 2023, 1,325,900 people with an income below 637.92 leva were below the poverty line. We can hardly imagine that people with an income of 638, 700 or 800 leva live much better. Against this background, the new government – like the old one, it only talks about the eurozone and nothing about the people.