3202 | 18 Nov. 2025 | 19:55

Employers strongly oppose new insurance and doubling of dividend tax, calling for a revision

This is the possible budget, a debate on salaries will take place next year.

 This was stated by the Minister of Finance, Temenuzhka Petkova, after a three-hour debate with 13 votes from the ruling majority of GERB, BSP and TISP, the competent commission adopted the state budget plan for next year. The opposition voted against it.

 Petkova accused former Minister of Finance Asen Vasilev of the fact that expenses are increasing by 600 million leva annually. She also reiterated Prime Minister Rosen Zhelyazkov's promise to start a debate on raising salaries in certain sectors to the average wage, but only from next year.

 Deputy Governor of the Bulgarian National Bank, Petar Chobanov, also attended the commission meeting. The invitation was also answered by the trade unions and employers, after the project did not receive support in the Tripartite Council.

 "This income policy is not inflationary, but stimulates growth," was the position of CITUB, presented by the union's vice-president Lyuboslav Kostov.

 The criticism expressed by the Chairman of the Association of Industrial Capital in Bulgaria, Rumen Radev, was that "what exploded our thresholds of tolerance is the implemented change to the tax and social security system".

 "If the prices of oil increase, all goods and services will become more expensive and real income will decrease," warned Atanas Katsarchev from the Trade Union "Podkrepa".

 Municipalities, on the other hand, requested an additional year to use the deductions from the Waste Management Act without having to pay them to the Regional Water Inspections, stated Silvia Georgieva, executive director of the association.

 Employers have warned that the increase in social security contributions and dividend tax will increase the grey economy and will not bring the planned revenue into the treasury.

 In addition to the disproportionate costs and tax changes, employers expressed concerns about the projected revenues from the sales software, as well as the expansion of the list of goods with high fiscal risk. They called for the budget to be revised between the two readings.

 In response, Deputy Governor of the Bulgarian National Bank Peter Chobanov warned that the budget is on the edge with its deficit. “The advice we always give is not to go beyond this edge, but instead to make efforts to increase efficiency, resulting in a lower deficit that corresponds to economic development,” Chobanov recommended.

 He also stated that he had expected to hear from both unions and employers how the entry into the Eurozone will be used, reminding that the increase in our credit rating, which is natural after joining the Eurozone, can and should be used to increase investments in our country.

 The parliamentary parties also expressed their position: “We will support the 2026 budget.   Unlike all others, we like it. We consider it a good budget. It is not the only possible one, because nothing in our field is the only possible one," said Yordan Tzonev of MRF- NEW BEGINNING.

 "We want to build a strong state, and such is built on the foundation of a strong administration and institutions," he pointed out.

 "Incomes in the public sector should increase, as this group includes teachers, doctors, police officers, as well as people working in the armed forces" in a very difficult geopolitical situation. We must take into account the desire for income growth of all professions. We would not support a budget that includes a reduction of these incomes," Tzonev concluded.

 "Bulgaria has become the tax paradise of Europe," he cited German economists as saying and reminded that EU policy is directed towards equalizing taxes within it.

 Representatives of CC-DB, who had a different opinion, also joined the debate.

 "First, you promised not to increase the taxes and you did it, this is a terrible signal to businesses," said Martin Dimitrov from CC-DB.

 "The government, disregarding the opinion of employers, adopted the most damaging budget in the new history of Bulgaria," former finance minister Asen Vasilev said after the meeting.

 Sparks flew during the discussions between him and minister Temenuzhka Petkova.

 "This is the biggest tax increase since 1996. Recently, since the time of Zhivko Videnov; the budget, which dramatically increases expenditures, without including minimum wages, pensions, or defense expenditures. These three expenses are one fourth of the overall increase, while the remaining three fourths are going towards "piggies" and increasing expenses, Vasillev firmly stated.

 So what is actually recorded in the first budget in euros?

 It has record revenues and expenses, with a deficit of 3%, in other words, according to the rules. The state plans to collect 51.4 billion euros, and spend almost 55.1 billion euros. The difference is 3.2 billion euros, which means that the 3% deficit will be met.

 45.8% of the GDP will be distributed through the budget, which is a violation of the fiscal rule that state expenditures should be up to 40% of gross domestic product.

 
 State finances accounts have been made with an economic growth of 2.7% and an average annual inflation of 3.5%.

 The main source of income will be predominantly tax revenues, with a target of collecting 28.4 billion euros. The most expected revenue is from VAT - around 14 billion euros, followed by taxes on individuals with 4 billion euros. Expenses for the maintenance of officials and public servants remain high - 7.3 billion euros.

 The minimum wage from next year will be 620 euros. The debt will reach 37.6 billion euros or 31.3% of GDP by 2026. The minimum size of the fiscal reserve as of December 31, 2026 is set at 2.4 billion euros. The capital program is set at 980 million euros.

 Changes in the law on local taxes and fees provide another extension for municipalities that are not ready to collect the waste disposal fee according to the new methodology. The municipal councils have not approved the budget plan for 2026 and/or have not adopted the relevant acts for setting the household waste fee for 2026 in the same manner as for 2025.

 Municipalities are expected to provide information on their readiness by the end of 2028.

 The gambling tax is increased with the argument of generating additional revenue for the state budget and thus providing additional funds for social and economic expenses. The social security contribution is increased by 2% for 2026 and by an additional percent in 2027. The "dividend" tax is doubled - from 5% to 10%.