The Average Bulgarian is Paying less for Food and more for Taxes

Society | December 9, 2017, Saturday // 11:54| Views: | Comments: 0
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The budgets of the Bulgarian families have undergone significant metamorphoses in recent years. There is a clear trend - the burden on food costs is decreasing, but the burden of tax and social security increases, says an analysis of the Institute for Market Economics (IME).

It turns out that in this respect we are becoming more and more like others in the EU. Between 2008 and 2016, the share of spending on food and non-alcoholic beverages in the total budget of the Bulgarian has dropped from 36.6% to 30.8% and it is quite possible in the coming year to go down to below 30%, as is the case in all remaining members of the European Union, Yavor Alexiev from IME commented.

Beyond the average figures, however, there are huge differences. For the richest ten percent of households in our country, everyday goods for consumption account for less than 25 percent of all spending, while for the poorest 10 percent food and beverages cost over 43 percent of the family budget. This is the data of the NSI for last year.

Similar is the picture when considering the burden of household bills - for electricity, gas, water, heating, etc. The poorest pay 20% of their whole income. And people with the highest incomes cover those expenses with just one-tenth of their budgets.

Dramatic are differences on the "rich-poor" axis in the cost of culture, education, tourism, entertainment. People who have difficulty make both ends meet spend the symbolic 2.4%. And the wealthiest households spend 7.4% of their budgets on cinema, opera, theater, books, learning, holidays, excursions, and so on.

Even more obvious are the disparities in payments for taxes and social security contributions. For the poorest one-tenth of the population, they are only 3.8% of all expenses. While the richest 10 percent give 16.5% of the family budget for levies and social contributions.

In practice, for those who earn a good amount of money debts to the treasury are the second-largest expense after food costs. And for poor taxes and social security are quite a burden. Interesting detail is that in fact the poorest 10% of households give more for cigarettes and alcohol - 4.3% than for taxes and social security - 3.8%.

All these differences have logical explanations and they are in the revenue side of family budgets. In the group of the richest, almost 80% of income comes from wages, entrepreneurship, fees, and so on. People who are on the other pole rely mostly on pensions, social benefits, or other kinds of add-ons. That is why poor households give a very small percentage of their tax money, and the rich fill the treasury.

The cost structure of Bulgarian households is improving, as reported by IME. The ever lower share of food costs shows lifting the standard of living. But this positive development goes hand in hand with a negative phenomenon - the relative share of households' tax and social security spending is growing. In 2008, for taxes and social security contributions, they went below 7% of all the costs of the average Bulgarian household, and in the past, these liabilities went up to a 12% share. This is due to the increase in the tax burden, but also to the increase in employment in the economy - the more people work, the more households pay labor taxes as well as social security contributions. Part of the effect may also be due to the diminishing of the gray economy, economists said.

 

The survey also shows other interesting trends. One of them is that, especially for the richest Bulgarians, the cost of food does not decrease especially as a share in their total spending. The explanation is that they become oriented to expensive extra-quality goods and shop in luxury stores. This explains the rise of specialized stores - for organic products, fish delicacies, boutique bakeries and pastry shops. The boom of these retail outlets is only in the big cities, where income grows more tangible.

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