By Dr George Veltchev, managing partner of Delta Capital International AD and investor in Bulgarian tourism
Recently, and seemingly out of the blue, the issue of the Value Added Tax (VAT) in the tourist sector popped back up on the agenda. As expected, everyone who earns their living from the tourist industry rose together against the tax hike with the usual nonsense like "the 2011 contracts have already been signed" (as if this would matter – everyone, who has worked in Bulgaria's tourist sector for more than 2 weeks knows that the industry is a price taker, and has nothing to do with the product's cost), or "our competitors are taxed less" (as if it matters how much the tax is in Greece or Austria where the same product is sold at prices 2 -3 times higher).
The "usual suspects" stood on the other side of the fence – those who watch how others make money from tourism – with equally groundless arguments such as "there must be fairness for all sectors of the economy" (as if any other sector besides tourism can so effectively transfer benefits to Bulgarians from all other Europeans or transform in such large scale 99% of its turnover in Gross Domestic Product, GDP). And in the middle of the dispute, as usual, is the cabinet, which must comply with EU laws, not reduce the VAT rate even further, risking accusations of yielding to lobbying, and, at the same time, be careful not to kill the goose that lays the golden eggs....
Bulgaria has Greece and Turkey as its tourist competitors. Is it really such a good idea in that environment for any government to be gouging at the tourist pocket.
The average tourist isn't as affluent as they make them out to be.
50% more Chinese Tourists in Bulgaria
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