The state will collect voluntary donations from companies in order to limit the budget deficit to the extent that it meets the requirements for membership in the eurozone, that is, not to exceed three percent of the Gross Domestic Product. The transitional and final provisions to the draft budget include changes to the Corporate Income Tax Act , according to which donations are deducted from the tax base of the company that makes them.
§ 4. (1) Legal entities may make voluntary contributions to the central budget for the purposes of supporting the financing of public investments included in the state budget.
(2) Contributions under para. 1 shall be transferred to the account of the National Revenue Agency, with the amounts contributed being recognized for tax purposes regardless of Art. 26, item 7 of the Corporate Income Tax Act, when determining the corporate tax in accordance with the Corporate Income Tax Act proportionally for the next three calendar years.
Here we must recall that the Ministry of Finance distributed the draft budget in question on February 18 at 10:58 p.m. That is, one hour and two minutes before midnight. This put the media in a situation where we were looking for a quick story for the late news broadcasts, and then few continued to look into the details. And there is almost always something very interesting there. When the acting Minister Lyudmila Petkova proposed a tax amnesty, at least there was a proposal for a deal with the private sector: “recognize your hidden profits and pay your overdue debts. You will be exempt from future inspections and you will not be charged penalty interest“.
Temenuzhka Petkova's draft budget tries to collect money in an even more uncertain way. Why should a private company that makes a profit make voluntary donations to the budget? Who will do the apostolic work of knocking on doors and telling companies: “you can be patriots, give a few leva so we can reduce the deficit“? The money that companies give will not be deducted from their taxes, but from the tax base.
For example, if the donation is for 100,000 leva, this will be counted as an expense, the tax base will decrease by 100,000 leva, and the company will pay 10,000 leva less in tax compared to the scenario of not making a donation. However, she will have 90,000 leva less, because for the 10,000 leva tax savings she donated 100,000 to the eurozone.
In the circle of jokes
Now entrepreneurs who consider themselves modern, forward-looking and committed to our further integration into European structures will be able to disguise their vision in concrete action, giving their little bit. It will also be seen whether prominent businessmen with clearly highlighted positions during their television appearances are ready to sacrifice themselves for a cause, or they simply want the state to do some work.
A month and a half ago on Epiphany, Levon Hampartzumyan said: "People like me, active in business with careers with some positions in society, they want it because they would have a direct benefit. Now, some other people, most likely those who bathe in the river early in the morning, instead of getting vaccinated, go to melt in the cold water... My point of view is that it is better to get vaccinated than to melt in the river, but when you have such settings, all kinds of things can enter your head that are counterproductive in the big picture. Our interest is to be in the eurozone. Now, Mr. Hampartzumyan, as the former director of the largest bank in Bulgaria, at the time of his resignation, can personally engage the entire nationally responsible business elite and appeal to them to fill the hole in the budget.
Now seriously
What is the logic of betting on such an opportunity. The wording "contributions to the central budget for the purposes of supporting the financing of public investments included in the state budget" implies money that is directly available to the government. If it is to finance public investments, its amount for this year is estimated at 13 billion leva. Again, with such large planned expenses, there is no way that this measure can be used to find little money. If the need for the funds were small, it is unlikely that an entire law would be changed to open the door for their collection. It is obvious that donations are relied on to create a macro effect, which means additional revenues of the order of hundreds of millions to over one billion leva.
It is quite logical to assume, especially in a country like Bulgaria, that donors may receive informal, but still real privileges.
There's no point in fooling ourselves. A huge part of the establishments that continued to accept trusted customers during the restrictive measures are putting up GERB posters when the elections come. Is it certain that they will not receive priority access to public procurement, blue lights for company cars, the right to park wherever they want and the right to drive at whatever speed they want.
The tragedy caused by Georgi Semerdzhiev showed that there are people whom the authorities protect, but until it becomes impossible to protect them, the list of outrages becomes huge.
Five days ago, when I wrote the quick text on the budget, I commented that “if by chance, after 10 months, it turns out that this feat has really been accomplished (to end 2025 with a deficit below 3% of GDP), it will either mean that the tax authorities have torn the private sector from inspections and administrative pressure without giving it a chance to breathe of unprivileged enterprises“. A closer look at the draft budget also shows the legal basis on which everything will happen. The NRA is given carte blanche to knock on companies and rattle the can for Euro donations. The alternative hypothesis is that we are on the way to creating a Euro-oligarchy, both of which sound scary.