E-Govt to Fetch BGN 3 B Per Year into Bulgaria's State Budget

Business | November 28, 2011, Monday // 18:25
Bulgaria: E-Govt to Fetch BGN 3 B Per Year into Bulgaria's State Budget Vasil Velev, Chairman of the Bulgarian Industrial Capital Association (BICA), has outlined the benefits that the introduction of the e-government would bring. Photo by BGNES

The state budget will receive an extra BGN 3 B per year if the Cabinet introduces the e-government with the full range of services for the business sector and the citizens and if the administrative burden for employers is alleviated, according to Vasil Velev, Chairman of the Bulgarian Industrial Capital Association (BICA).

On Monday Velev presented the results of the survey "Restricting and preventing the informal economy 2010-2013" conducted by the employers'organization.

According to the report, Bulgaria's shadow economy amounts to 32-33% of GDP, which places the country among the top three in the EU, accommpanied by Greece and Romania.

The data for the size of the grey economy has been obtained through a method using official statistics.

Velev argued that if the executive and the legislative branches simplified procedures through which the business sector makes payments to the state, its customers and its employees, a large portion of shady employers would come into the light.

He claimed that many businesses preferred to stay underground not only to avoid payments to the state but because they had no access to a convenient method for the transactions.

BICA's Chairman insisted that the introduction of the e-government, combined with less paperwork required for ongoing operations,would cut the grey sector by 10 percentage points, which would fetch BGN 3 B into the state budget, provided that the current economic growth rate stayed the same.

He also noted that if the grey sector was taken into account, the country's GDP, currently at BGN 77-78 B, could top BGN 100 B.

He recommended introducing an obligation for all traders, regardless of sector or company size, for using cash registers connected to the National Revenue Agency (NRA).

Stefan Petranov from BICA, one of the key people behind the survey, explained that the Black Sea city of Burgas registered the biggest grey market share, with employers and employees estimating the illegal sector at 61.3%.

Petranov added that the second in the ranking was Yambol with 61.1%, Sofia had 41.3%, while the lowest share of the shady sector was observed in Kardzhali and Razgrad, which scored 34.2% and 39.4%, respectively.

Petranov also highlighted that, judging by BICA data, around 45% of Bulgaria's export to third countries was suspicious.

He said that there was a large discrepancy between the export rates to Macedonia, Turkey and Ukraine reported by Bulgaria and the data provided by these countries' statistical offices.

He attributed the mismatches to fictive export and to the practice of lowering the value of import declared by foreign companies to their customs authorities.

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Tags: Bulgarian Industrial Capital Association, BICA, Vasil Velev, grey economy, e-government, red tape
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