BIA: BGN 12.4 BN SUNK IN THE GRAY ECONOMY IN THE LAST FIVE YEARS

“In the period 2007-2012 the growth of tax revenue is only 11% provided that in the same period there has been a 29% GDP growth and substantial increase of some economic parameters that lead to an increase in direct and indirect taxation population. “

This was said by the Executive Chairman of BIA Danev on a conference today, February 20, 2014. He presented the results of a study about the growth of the informal economy. According to him, object of study is not the volume of the informal economy but the changes in this volume. The way through which this study is carried out is by the usage of statistics from the National Statistics and Eurostat. Sociological data is not used.

The data shows that the results from the period ( 2007-2012) the volumes of gray economy has increased on average by 3.4% per year, the highest growth rates were recorded in the period 2009-2012 is particularly dramatic growth of the informal economy observed in 2010 . (more than 5.1%), which began to decrease slightly in the coming years.

In nominal terms, the period 2008-2012 the uncollected tax assets are more than 12.4 billion bgn. This reduction is rather arbitrary due to the fact that in this period there are the most significant changes to the economic parameters that influence the growth of tax revenues, including:

• average salary was increased by 80%
• minimum wages - 61 %
• minimum insurance income - 80 %, and for the self - 91%
• social security rate - 25 %, and health insurance - 33%
• The ceiling on taxable Social Security income - 42.8 %
• rates of excise duty -12 ÷ 30 %, etc.

This should lead directly and indirectly to a significant increase in tax revenues. There is, however, an opposite trend of a reduction of more than twice the growth of tax revenues, compared to GDP growth.

As a share of GDP, the percentage reduction in tax revenues for 2012 compared to 2007 is the most significant income from capital gains tax - 48 points, while keeping the tax rate of 10%.The second largest reduction in these revenues from VAT - 21 points, regardless of the change in the rates and GDP growth by 29%. The relative stability of the volumes of revenues from contributions PIT, excise duties is false because it does not reflect the above changes in some economic parameters.

In order to reduce the gray economy BIA offers some legislative and organizational measures, including:

• Strengthening of the analytical units in the NRA to identify hidden speed, income, insurance payments, violations;
• Review the results of the NRA installed software to detect tax fraud;
• Building a digital library based (data center) for storage, processing and analysis of accounting information company for the entire period ;
• Create a public register of appeals reversed and maintained audit reports by sectors and regions;
• Linking the system to stimulate the employees of the NRA with the results from the proceedings;
• Accelerated implementation of the new European Directive COM 2013 (721) to introduce a new standard for recovery of VAT;
• Establishment of effective tools for responsible government authorities in breach of statutory obligations;
• Through changes to the Health Insurance Act to adjust the procedure of recovery of health insurance and to introduce financial standards of healthcare to people without health insurance in defining the direction of the source to cover the costs incurred by the health system;
• To introduce the ability to control and penalties for illegal actions of state and municipal entities related to tax and social security payments and the Court of Auditors to carry out regular checks on their payment.