Days after labour unions leaked what was reportedly a set of spending cuts and measures to increase Budget revenue, which stirred public opposition to the Government, the Cabinet presented its official set of measures on March 23 at a meeting of the tripartite council of Government, employers and unions.

The list of 47 points had not been made public at the time The Sofia Echo went to print, since it requires the tripartite council’s approval before the Cabinet can begin implementing the measures. Indeed, measures could be added to the list during the course of the discussions, the Government’s media service said in a statement.

Finance Minister Simeon Dyankov said on March 23 that the Cabinet sought 1.5 billion leva in additional revenue for the year.

The measures drafted by the Finance Ministry were grouped into four categories: measures to support the private sector; to strengthen financial discipline; to strengthen the fiscal authorities; and measures aimed at the labour market and the social security system.

Several of the proposed measures have made headlines, foremost the Finance Ministry’s proposal to increase value-added tax (VAT) rate by two percentage points to 22 per cent.

While the measure would without doubt raise additional revenue – about 540 million leva if implemented as of May 1, according to daily Dnevnik, which claimed to have seen the Cabinet proposal – some economists have criticised it as procyclical and certain to aggravate the economic recession.

Another measure that could raise funds quickly would be the sale of carbon credits established under the Kyoto protocol, which could raise about 200 million leva this year, according to the proposal, as quoted by Dnevnik.

The sale of carbon credits, more lax investment guidelines for the Government’s Silver Fund in the pension system, the sale on the bourse of the Government’s minority stakes in a string of companies, along with the issuing of an unspecified amount of new government bonds both domestically and abroad, was approved by the tripartite council in the first day of talks without difficulty, since none of the measures carried any immediate adverse effects.

On the second day of negotiations, the council found it more difficult to reach consensus during discussions about freezing current end-user utility prices and the proposed increase in VAT.

The moratorium on utility price increases was another proposal criticised by economists as virtually useless, since it would neither bring in revenue, nor cut costs. No decision on the VAT rate increase had been made at the time The Sofia Echo went to print.

Other measures in the Finance Ministry’s list include the imposition of a luxury tax on yachts, and on bank deposits of more than 100 000 leva, cars of more than 150 horsepower and residential properties of more than 250 sq m, which would be collected by local authorities and not reach the state Budget. This would net a total 150 million leva in revenue, according to Dnevnik, but the final number has been disputed by some economists.

Dyankov presented the list at a closed-doors meeting with economists and MPs on March 23, but did not appear to be successful in persuading his audience. According to a statement released after the meeting by the ministry’s media office, the "prevailing opinion of economists is that the proposals should target spending cuts, including cuts in the capital and upkeep costs of state institutions".

Institutions that needed urgent reform and spending cuts were the Interior and Defence Ministries, while the pension and health care systems had to have their spending restricted, according to the economists present, the statement said.

One possible way to solve all problems in one swoop – taking a loan from the International Monetary Fund – does not appear to be on the Cabinet’s agenda.

The tripartite council was scheduled to resume discussions of the Government proposal on March 26-28.