Bulgaria’s PM against imposing municipality tax on personal incomes

The tax system will not be subject to any amendments during the current government’s mandate, PM Borissov said and rejected the idea of deputy PM Tomislav Donchev for a potential introduction of municipality tax on personal incomes, local media reported. PM Borissov was surprised by Donchev’s idea, which obviously was not coordinated with neither the PM nor other cabinet members, in our view. Donchev had said in an interview for the local 24 Chasa in the previous day that a debate on imposing a municipality tax on the personal income was necessary in order to increase municipalities’ revenues and give them tools and financial sources to develop on their own. He had recalled that two years ago the government had proposed a similar initiative, aiming to allow every municipality to add an additional tax on the standard personal income tax. The initiative was rejected by the parliament though and we believe that public and political attitudes towards such a measure continue to be highly negative. We note that the junior coalition parties from the nationalist United Patriots coalition rejected the introduction of preferential VAT rates earlier this year, arguing that the coalition agreement included a strict commitment for no changes in the tax system during the government mandate.

 

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