Bulgarian Prime Minister Promises Tax Cuts, Privatisation reform

by Ulrika Lomas, Tax-News.com, Brussels

20 August 2001

In his first public speech after recent elections gave him power, Bulgaria's prime minister Simeon Saxe-Coburg pledged on Sunday to overhaul the tax system, reduce the size of government and raise the minimum wage for state workers.

The former King Simeon II said his government would make the privatization process transparent, cut state administration by 10 percent and raise the public sector minimum wage by 17 percent. He said that his government, which includes many non-political technocrats, was introducing tax reforms to encourage investment, including a zero tax rate on company profits that are reinvested.

"These measures are aimed at a functioning market economy, at better living conditions for the people and at a robust fight against corruption," Simeon said in the televised statement. "The last couple of months have put Bulgaria at centre of world attention. If we disappoint expectations now the cost for the country will be very great," he said.

In an effort to promote Bulgaria's economic recovery, he pledged to create a national fund of $9.5 million to distribute individual interest-free loans in municipalities with the highest unemployment.

Mr Saxe-Coburg said that he would create a level playing field for the privatisation process, and would abolish the much criticised previous system that favoured management/worker buyouts. The Privatisation Agency would be the only government institution involved in the sale of state-owned assets; Government ministers had in the past been accused of appointing political associates as managers so that they could benefit from the sell-offs.

The Prime Minister also said he was introducing radical measures to reform the country's customs service, which is known to be corrupt. His government would invite foreign experts to supervise day-to-day operations: "They will smash corruption and bring the black economy into the light," he said.

Simeon, who lived for decades in exile in Spain, returned earlier this year to his homeland to win a sweeping victory in the June 17 parliamentary elections that gave his National Movement Simeon II 120 of the 240 seats in parliament. Last month, he formed a coalition Cabinet that includes members of the mainly Turkish Movement for Rights and Freedoms and the Socialist Party.

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