Left Flat by the Flat Tax?
If you want to understand the nature of the Greek crisis – sit in a darkened room watching Zorba the Greek.
If you want to understand the nature of the Bulgarian crisis – take a walk in downtown Sofia.
Ferraris and horse carts share the road in a snapshot of Bulgaria's transition. In between, an employee is waiting for the bus.
What all they share are taxes, flat taxes, that is.
The rulers' surprising decision to levy tax on bank deposit interest – in theory just an extension of the flat-rate tax base - fueled controversies and no little criticism.
It hurt the emotions mainly of those 75% of deposit holders in Bulgaria with BGN 1000 in their accounts. Because they were reminded that namely a flat tax is imposed on their miserable incomes - BGN 500, for ex.
Why not introduce a non-taxable threshold?
The strict policy is hardly because we are more American than Romney and more German than Merkel.
It is because being uptight about the human cost does not pay off, unlike being good to the rich back-seat rulers.
Which hardly makes the average Bulgarian better off than the average Greek, as claimed by the finance minister, right?