While it's early in the mandate of Bulgaria's new government, the first rift in the coalition between the National Movement Simeon II (NMSII) and the Movement for Rights and Freedoms (MRF) may be developing.
And it all comes from that nasty little habit of smoking.
Bulgartabac, the state-owned cigarette monopoly and one of the country's never-ending privatization stories, has submitted a request to the government for cigarette prices to be raised by an average of 10 per cent. Their reasoning is simply so the company can have more money to buy quality tobacco and that they can pass along the price increase to tobacco farmers. It is, of course, not profit-motivated at all.
Interestingly, the Minister of Agriculture and Forests, Mehmed Dikme, strongly supports the idea of raising cigarette prices so that prices for raw tobacco can in turn be increased, thus giving farmers of Bulgaria's most important resource more money. Dikme recently proposed a 50 per cent hike in the price of tobacco. As a representative of the ethnic Turkish MRF, Dikme seems to be representing his constituents quite well, many of which are tobacco farmers. But he seems to have forgotten that he is supposed to be representing the rest of the country as well, many of which are not tobacco farmers.
Obvious downsides of such a move include pesky little things like inflation, and being able to privatize Bulgartabac within the next decade. With MRF representatives in government, it's going to be hard enough as it is. Aside from having their coalition partner trying to exert as much influence on an issue as possible, NMSII ministers still have a fairly contentious issue to face early on in their young political lives.
After a wide range of "radical" (or unrealistic) economic promises during the election campaign, the thought of adding 41 million leva a year to budget revenues as a result of VAT and other tax collection on a cigarette price increase is fairly attractive. One might even go so far as to say it's responsible.
Countries all over the world use cigarettes, alcohol and petrol as easy ways of putting more money into the state coffers to fulfill election promises. In comparison to most European countries, Bulgaria's cigarette prices look artificially low. England, for example, sells them for more than 12 times as much.
But a price increase will be far from popular in a country where between 98 and 98.5 per cent of the adult population smokes (not official data, more an estimate). And with salaries at their current low levels, many Bulgarians would take issue with having to pay more for one of life's little pleasures. Cigarettes have remained the same price since the start of 1999, most likely for this reason.
So Economy Minister Nikolai Vassilev is faced with a fairly tough decision. If prices go up, some of the population will definitely take issue with it, while tobacco farmers will welcome it. But those same farmers lack a guarantee that the price increase will be passed along to them from Bulgartabac.
Changing regulations for raw tobacco pricing would also make the state company less attractive on the privatization market.
What's a minister to do? Well, there's always the Western way of justifying price increases by explaining that it's simply to discourage people from smoking.
And it all comes from that nasty little habit of smoking.
Bulgartabac, the state-owned cigarette monopoly and one of the country's never-ending privatization stories, has submitted a request to the government for cigarette prices to be raised by an average of 10 per cent. Their reasoning is simply so the company can have more money to buy quality tobacco and that they can pass along the price increase to tobacco farmers. It is, of course, not profit-motivated at all.
Interestingly, the Minister of Agriculture and Forests, Mehmed Dikme, strongly supports the idea of raising cigarette prices so that prices for raw tobacco can in turn be increased, thus giving farmers of Bulgaria's most important resource more money. Dikme recently proposed a 50 per cent hike in the price of tobacco. As a representative of the ethnic Turkish MRF, Dikme seems to be representing his constituents quite well, many of which are tobacco farmers. But he seems to have forgotten that he is supposed to be representing the rest of the country as well, many of which are not tobacco farmers.
Obvious downsides of such a move include pesky little things like inflation, and being able to privatize Bulgartabac within the next decade. With MRF representatives in government, it's going to be hard enough as it is. Aside from having their coalition partner trying to exert as much influence on an issue as possible, NMSII ministers still have a fairly contentious issue to face early on in their young political lives.
After a wide range of "radical" (or unrealistic) economic promises during the election campaign, the thought of adding 41 million leva a year to budget revenues as a result of VAT and other tax collection on a cigarette price increase is fairly attractive. One might even go so far as to say it's responsible.
Countries all over the world use cigarettes, alcohol and petrol as easy ways of putting more money into the state coffers to fulfill election promises. In comparison to most European countries, Bulgaria's cigarette prices look artificially low. England, for example, sells them for more than 12 times as much.
But a price increase will be far from popular in a country where between 98 and 98.5 per cent of the adult population smokes (not official data, more an estimate). And with salaries at their current low levels, many Bulgarians would take issue with having to pay more for one of life's little pleasures. Cigarettes have remained the same price since the start of 1999, most likely for this reason.
So Economy Minister Nikolai Vassilev is faced with a fairly tough decision. If prices go up, some of the population will definitely take issue with it, while tobacco farmers will welcome it. But those same farmers lack a guarantee that the price increase will be passed along to them from Bulgartabac.
Changing regulations for raw tobacco pricing would also make the state company less attractive on the privatization market.
What's a minister to do? Well, there's always the Western way of justifying price increases by explaining that it's simply to discourage people from smoking.
