THE year 2004 saw 10 important positive developments in Bulgaria’s economy, the Institute for Market Economics (IME) wrote in an article published in its latest newsletter on February 11.
The top three are privatisation, the lowering of taxes for businesses and the arrival of a third GSM mobile operator. These developments were essential for the country because they will lead to increased prosperity of Bulgarian citizens, the IME says.
In 2004, according to the Privatisation Agency, shares of 1376 companies were sold. The total financial effect of these transactions was about three billion leva. So far, more than 57 per cent of all state assets have been privatised.
More state assets were privatised in 2004 than in 2002 and 2003 put together. Furthermore, several strategic privatisation deals were struck: the Bulgarian Telecommunication Company was sold as well as the electricity distribution companies.
The corporate tax was cut to 15 per cent due to which Bulgaria was among the eight countries in Europe with lowest corporate tax rates. Besides, the dividend tax was halved to seven per cent (zero per cent for EU residents). Furthermore, the tax-deductible depreciation rates for new production equipment were increased.
Along with the privatisation of the Bulgarian Telecommunication Company, it was granted a licence for a third GSM operator. It is expected to launch services in April and thus increase the competition and the positive results of it in the sector.
IME praised the fact that Finance Minister Milen Velchev defended classical liberal ideas. An increasingly higher number of people in Bulgaria realise the importance and advantages of the market economy, private property, competition, or they understand the value of liberty. This development has serious positive effects on the economy. It was the basis for the December 2004 libertarian speech of Velchev, in which he defended the classical liberal principles, insisted on zero profit tax and flat income tax.
IME saw the increase of investments as important for enlarging the capacity of the economy to produce more. For three consecutive quarters the gross fixed capital investments have been above 20 per cent of the GDP and the foreign investments are also on the rise.
In 2004 some signs were noticed that the Bulgarian Socialist Party (BSP) has begun to realise the importance of business for development. BSP supported the corporate tax cut to 15 per cent and even proposed zero corporate tax on the reinvested profit. Moreover, it hinted that government spending must be capped at about 40 per cent of the GDP.
In the first three quarters of 2004 the private sector increased by 10 per cent. As it accounts for 77 per cent of the economy, this development has positive effects on the economy as a whole, despite the drop in the public sector. The fast increase of the private sector will result in more employment and higher wages.
The proposal of the IME for the introduction of a flat rate of 10 per cent for income tax, corporate tax and social security contributions is gathering momentum. The institute saw it as a serious improvement since it was backed by economists, financial experts and intellectuals, as well as by Velchev.
IME is an independent Bulgarian economic think-tank set up in 1993. It sees its mission is the development and advocacy for market approaches to the challenges facing businesses initiative in the country.
The top three are privatisation, the lowering of taxes for businesses and the arrival of a third GSM mobile operator. These developments were essential for the country because they will lead to increased prosperity of Bulgarian citizens, the IME says.
In 2004, according to the Privatisation Agency, shares of 1376 companies were sold. The total financial effect of these transactions was about three billion leva. So far, more than 57 per cent of all state assets have been privatised.
More state assets were privatised in 2004 than in 2002 and 2003 put together. Furthermore, several strategic privatisation deals were struck: the Bulgarian Telecommunication Company was sold as well as the electricity distribution companies.
The corporate tax was cut to 15 per cent due to which Bulgaria was among the eight countries in Europe with lowest corporate tax rates. Besides, the dividend tax was halved to seven per cent (zero per cent for EU residents). Furthermore, the tax-deductible depreciation rates for new production equipment were increased.
Along with the privatisation of the Bulgarian Telecommunication Company, it was granted a licence for a third GSM operator. It is expected to launch services in April and thus increase the competition and the positive results of it in the sector.
IME praised the fact that Finance Minister Milen Velchev defended classical liberal ideas. An increasingly higher number of people in Bulgaria realise the importance and advantages of the market economy, private property, competition, or they understand the value of liberty. This development has serious positive effects on the economy. It was the basis for the December 2004 libertarian speech of Velchev, in which he defended the classical liberal principles, insisted on zero profit tax and flat income tax.
IME saw the increase of investments as important for enlarging the capacity of the economy to produce more. For three consecutive quarters the gross fixed capital investments have been above 20 per cent of the GDP and the foreign investments are also on the rise.
In 2004 some signs were noticed that the Bulgarian Socialist Party (BSP) has begun to realise the importance of business for development. BSP supported the corporate tax cut to 15 per cent and even proposed zero corporate tax on the reinvested profit. Moreover, it hinted that government spending must be capped at about 40 per cent of the GDP.
In the first three quarters of 2004 the private sector increased by 10 per cent. As it accounts for 77 per cent of the economy, this development has positive effects on the economy as a whole, despite the drop in the public sector. The fast increase of the private sector will result in more employment and higher wages.
The proposal of the IME for the introduction of a flat rate of 10 per cent for income tax, corporate tax and social security contributions is gathering momentum. The institute saw it as a serious improvement since it was backed by economists, financial experts and intellectuals, as well as by Velchev.
IME is an independent Bulgarian economic think-tank set up in 1993. It sees its mission is the development and advocacy for market approaches to the challenges facing businesses initiative in the country.
