Bulgaria will have a budget deficit of 2.5% in 2011, and will bring it under 1% in 2013, according to Deputy Finance Minister Vladislav Goranov.

Speaking at a public discussion forum dedicated to the role of the political right in dealing with the economic crisis, Goranov declared that the Borisov Cabinet is succeeding in keeping down the budget deficit.

In 2009, after a revision of the figures in the spring of 2010, Bulgaria registered a budget deficit of 3.9% of GDP under EU accounting rules.

In June, the center-right cabinet revised the state budget increasing its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.

"We do not need another revision of the State Budget Act by the end of the year," Deputy Finance Minister Goranov told journalists pointing out that the average EU deficit level will be 6.5% in 2010.

With respect to the proposals for increases of certain tax rates published Tuesday on the website of the Finance Ministry, Goranov explained that the measures are yet to be debated.

This includes proposal to increase the VAT on group tourist services which at present is 7% for organized groups and a regular 20% rate for self-organized tourists. The proposal is for a 14% unified rate for all tourist transactions, which will guarantee equality for all tourists. Bulgaria's value-added tax for all other sectors is 20%.

The Deputy Minister pointed out this measure had to do with an infringement procedure against Bulgaria by the European Commission based on the fact that the lower VAT rate did not include all tourist services but only the organized groups.

He explained that the government had struggled to find a compromise solution about the VAT on tourism because if the 7% rate is spread to absolutely all tourist services, the budget will suffer losses, but if the lower rate for organized groups is abolished altogether, the tourism sector will bear the brunt. In his words, the proposed universal 14% rate might not be the best decision but is one of the options.

Goranov said when the 7% VAT on tourist services was introduced, there was a plan with a timeline to increase it gradually to 14% by 2009.

He explained that the government had struggled to find a compromise solution about the VAT on tourism because if the 7% rate is spread to absolutely all tourist services, the budget will suffer losses, but if the lower rate for organized groups is abolished altogether, the tourism sector will bear the brunt. In his words, the proposed universal 14% rate might not be the best decision but is one of the options.

Goranov said when the 7% VAT on tourist services was introduced, there was a plan with a timeline to increase it gradually to 14% by 2009.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!