THE Movement for Rights and Freedoms (MRF) has refused to accept a proposal by Finance Minister Milen Velchev to cut the subsidies of the Agriculture and Tobacco State Funds by a total of 25 million leva.
The cuts became necessary after the MRF insisted that the lowest income tax should be reduced further, that 80 per cent of salaries should be paid during sick leave, and that the minimum tax bracket should be raised. According to the Finance Ministry, all this would cost 70 million leva.
The conflict between the ruling National Movement Simeon II and its coalition partner the MRF led to an urgent meeting between Velchev and Prime Minister Simeon Saxe-Coburg.
"I am sure we will be able to reach an agreement and approve the Budget Act," Velchev said after the meeting. He also had talks with MPs from the MRF, but the leader of the party, Ahmed Dogan, was not present.
Later, Dogan told journalists that the whole macro-frame of the budget should be reconsidered. Dogan also said that the income tax cuts were designed to support families in poor regions and should not be offset by symmetric adjustments in transfers that also affect those regions.
He said the Finance Ministry was serving other interests by selecting the two funds for adjustments. Accor-ding to the MRF, the lower revenues should be compensated for by a reduction in the ministries' budgets.
Velchev said that the gap could not be covered by solely cutting the ministries' financing, which would be a catastrophe for them.
If the whole amount is to be compensated by the lower maintenance, the ministries will receive 70 per cent less money in 2004 than this year, Velchev said.
Lyutvi Mestan of the MRF countered: "We will not yield".
Other compensatory mechanisms should be found, Mestan said.
The amount of 70 million leva which is now at the centre of the dispute accounts for 0.18 per cent of the GDP and would widen the budget deficit target to 0.9 per cent next year if other adjustments to the draft budget are not made.
Velchev said that the MRF might vote against the budget during its second reading in Parliament, but the Finance Ministry would try to avoid this happening.
He said that the ministry's ability to adjust the deficit target with changes on the expenditure part of the budget was limited, and it would most likely seek new changes in the corporate, property or excise taxes.
Final approval of the budget is already behind schedule, because the Finance Ministry needs about a month after the approval of the budget to prepare detailed expenditure plans with the municipalities.
- Business Staff
The cuts became necessary after the MRF insisted that the lowest income tax should be reduced further, that 80 per cent of salaries should be paid during sick leave, and that the minimum tax bracket should be raised. According to the Finance Ministry, all this would cost 70 million leva.
The conflict between the ruling National Movement Simeon II and its coalition partner the MRF led to an urgent meeting between Velchev and Prime Minister Simeon Saxe-Coburg.
"I am sure we will be able to reach an agreement and approve the Budget Act," Velchev said after the meeting. He also had talks with MPs from the MRF, but the leader of the party, Ahmed Dogan, was not present.
Later, Dogan told journalists that the whole macro-frame of the budget should be reconsidered. Dogan also said that the income tax cuts were designed to support families in poor regions and should not be offset by symmetric adjustments in transfers that also affect those regions.
He said the Finance Ministry was serving other interests by selecting the two funds for adjustments. Accor-ding to the MRF, the lower revenues should be compensated for by a reduction in the ministries' budgets.
Velchev said that the gap could not be covered by solely cutting the ministries' financing, which would be a catastrophe for them.
If the whole amount is to be compensated by the lower maintenance, the ministries will receive 70 per cent less money in 2004 than this year, Velchev said.
Lyutvi Mestan of the MRF countered: "We will not yield".
Other compensatory mechanisms should be found, Mestan said.
The amount of 70 million leva which is now at the centre of the dispute accounts for 0.18 per cent of the GDP and would widen the budget deficit target to 0.9 per cent next year if other adjustments to the draft budget are not made.
Velchev said that the MRF might vote against the budget during its second reading in Parliament, but the Finance Ministry would try to avoid this happening.
He said that the ministry's ability to adjust the deficit target with changes on the expenditure part of the budget was limited, and it would most likely seek new changes in the corporate, property or excise taxes.
Final approval of the budget is already behind schedule, because the Finance Ministry needs about a month after the approval of the budget to prepare detailed expenditure plans with the municipalities.
- Business Staff
