Bulgaria's formerly ruling party has confirmed plans for not scrapping the 10% flat tax if elected a new term in office.

"The introduction of the flat tax is one of the success stories of Bulgaria's transition and GERB will keep it if elected for a second term," the pre-election program of the party says.

The stance echoes the words of former Finance Minister Simeon Djankov, who claimed the flat tax has to stay at least for the next ten-fifteen years to help the country catch up with other EU member states.

Meanwhile, the Socialist party, the strongest rival of the former rulers in the upcoming snaps, who introduced the flat tax five years ago, made a U-turn with calls for scrapping it.

The flat tax yielded good results, but at the moment it is not adequate as Bulgaria is witnessing an abominable social stratification and abominable injustices, the Socialists say.

Now the Socialist Party is calling for the return of a progressive income tax so that the upper-income households as well as the rich are taxed much more than the poor.

The Socialists are putting forward a simple, three-tier scale - zero tax for the poor, 10% for the incomes of the average Bulgarian and higher taxes for income, which exceeds a certain threshold, but definitely not 70% like in France.

According to the Socialists it is only logical that in the current situation their party asks the rich to bear the heavier burden of the crisis, while low incomes should be tax exempt.

As of 1 January 2008, Bulgaria introduced a 10% flat tax applicable for all income levels, i.e., there is no non-taxable income threshold. It replaced the previous system, which combined several different tax rates - between 20 and 24%, depending on income.

Bulgaria's 10% flat rate makes it the country with the lowest personal tax rate among European Union member states. Bulgaria also has the lowest social security rates, which coupled with a 10% flat rate, makes it very attractive for physical entities, employers and potential investors.

Over the last decade and a half, a number of countries introduced flat-rate taxation and Bulgaria jumped on the bandwagon in 2008.

The policy has a number of attractive features - equality, lower tax burden, the general trend to raise budget revenue as more companies leave the "shadow economy", just to name a few.

What made the debate in Bulgaria different is the fact that the proponents of the measure were the Socialists as it is usually the center-right parties that are aggressively pushing tax reforms.

Part of the reason why the flat tax has been an efficient tool in diminishing the "grey economy" in other countries is the willingness of governments to couple it with draconic measures to crack down on tax evasion.

Bulgaria, on the other hand, has notoriously been sluggish with its fight against corruption and organized crime.

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