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In the election campaign, all major right-wing parties suggested a decrease of the total fiscal burden.
submited on 26.05.2005 in category Political stability | Fiscal affairs
submited on 26.05.2005 in category Political stability | Fiscal affairs
All major right-wing parties suggested a decrease of the total fiscal burden (measured thought the total public spending) from nearly 42% of GDP in 2004 down to 35% in the next mandate. The socialist party, leading in the election polls so far, has suggested to keep the fiscal affairs status quo. Thus a significant difference of about BGN 10 billion is seen between the two alternatives in the suggested economic policy.
Meanwhile, major difference between the suggested right economic policy alternative remain:
• extent of tax cuts regarding heaviest taxes, and
• reform of the pay-as-you-go pension model.
The incumbent ruling party have proposed the most significant decrease of the taxes on labor – “pension” tax and personal income tax. The party has suggested a cut of the payments to the state social funds down to 19.6% of gross wage. Meanwhile, they have suggested a decrease of the highest rate of personal income taxation from 24% down to 19%. A similar approach was adopted by the second biggest right coalition ODS, with a very sight difference in the rates suggested. The third right-wing party, represented in the current parliament, has proposed a more moderate approach to tax cuts, suggesting to reduce social taxes down to 24.6%.
For the very first time the proposed “pension” tax cuts seem to be a politically realistic commitment. Two of the major parties – NDSV and SDS – have promised a change of the current pay-as-you-go pension system. A fundamental change of the model would take more than a single mandate, thus we try to judge the political sustainability of the reforms suggested during several cabinets. A major step in this direction is explicating the hidden debt of the current system, which has been proposed by both NDSV and ODS.
Meanwhile, major difference between the suggested right economic policy alternative remain:
• extent of tax cuts regarding heaviest taxes, and
• reform of the pay-as-you-go pension model.
The incumbent ruling party have proposed the most significant decrease of the taxes on labor – “pension” tax and personal income tax. The party has suggested a cut of the payments to the state social funds down to 19.6% of gross wage. Meanwhile, they have suggested a decrease of the highest rate of personal income taxation from 24% down to 19%. A similar approach was adopted by the second biggest right coalition ODS, with a very sight difference in the rates suggested. The third right-wing party, represented in the current parliament, has proposed a more moderate approach to tax cuts, suggesting to reduce social taxes down to 24.6%.
For the very first time the proposed “pension” tax cuts seem to be a politically realistic commitment. Two of the major parties – NDSV and SDS – have promised a change of the current pay-as-you-go pension system. A fundamental change of the model would take more than a single mandate, thus we try to judge the political sustainability of the reforms suggested during several cabinets. A major step in this direction is explicating the hidden debt of the current system, which has been proposed by both NDSV and ODS.
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