07.11.2015

"On Wednesday we presented a revised concept in regard to the changes in the laws on the Ministry of Interior, the defence and the armed forces as well as in the other laws governing employees' status. In practice, we do not need to withdraw the draft budget because between the first and the second vote in the National Assembly we will reflect what we have taken as a commitment, namely to preserve for the current staff the 20 salaries upon retirement, not to reduce remunerations, to keep the ration and to limit the annual leave." Minister of Finance Vladislav Goranov said the above in an interview for the broadcast "Sedmitsata" on Darik Radio. In regard to the annual automatic increase in the basic salary of all employees in the sector of defence and security, Minister Goranov commented that it was not the best solution because it did not reflect in any way the actual contribution of the employee concerned, did not contain an element of attestation or other indicators that could be used for better management of these systems. "The fundamental principle is that more years of service do not mean higher qualities and if qualification improves over the years this must be reflected in the pay, too; the salary should not increase automatically, without taking it into account," he said. The Minister reminded that such change was implemented back in 2012 for civil servants and expressed his personal support in the debate in favour of the abolition of the length of service bonus in the Labour Code, too. Vladislav Goranov announced that there was a discussion at working level with Deputy Prime Minister Kalfin on a package of measures that would be presented to the social partners as a topic for discussion and such a change could be included in it. "In principle, the length of service bonus is an anachronism in the employment relations which does not take into account realities in terms of labour quality," he was adamant. Minister Goranov also commented the proposed legislative changes relating to the payment of salaries on leaving the system: "A possible answer to the question whether employees should receive salaries upon retirement is "yes" but we must be fully aware that this type of payment is not related to the service, i.e. the 20 salaries received by police officers upon their retirement have no connection with police work - they receive these not because they are employed in the system but because they are leaving it". He assured that the budget until the end of the current year was in a position to cover the payments of those employees in the security and defence sectors who had decided to leave; however, he recommended them not to do so because there was no reason for that.

Minister Goranov justified the need to adjust the state budget with the fact that a year ago the government took office in a situation which was very dynamic and unfavourable to the fisc and the measures to deal with the emerging excessive deficit included also the reduction of personnel costs in the public sector by 10%. He added: "As early as at the beginning of the year we had doubts that this can be done in some sectors without major reforms and we proved right. Throughout the year we announced that changes are needed, especially in the systems of defence and security, but such changes failed to realize." The Minister pointed out that one third of the adjusted costs were intended for the personnel in those systems and if the change in the current year's budget did not take place, the staff of the Ministry of Interior would not receive their salaries for November and December and in practice those systems would stop functioning because their budget had been structured that way over the years.

„The philosophy of the 2016 budget is in two directions - from the perspective of the Ministry of Finance the philosophy is to reduce debt while limiting deficit and to achieve the stability which has traditionally been a fact over the years. If we talk about spending policies, in addition to the higher spending on defence and security we announced secondary education as a priority and I think that we have managed to find the resources for that in the expenditure part of the budget", the Minister said. In this context, he also commented the topic of fundamental science and its funding through the budgets of the Bulgarian Academy of Sciences and the Agricultural Academy: "Probably there are extremely talented and intelligent people in these systems. What we fail to achieve is to find the link between scientific activity and benefits to society". Minister Goranov assured that he maintained very good communication with Acad. Vodenicharov as well as that he would try to improve the financial position of the Bulgarian Academy of Sciences; according to him, however, regardless of the amount of money BAS received it was necessary to find a solid link between scientific achievements and benefits to the real economy.

In regard to the widely discussed topic for making a distinction between official and personal use, triggered by the proposals for VAT Law changes, the Finance Minister called for a common understanding that 200,000 legal persons registered for VAT purposes could easily organize their lives of individuals through their companies and in practice not to pay any VAT. He explained that the concept of VAT neutrality provided that if certain assets were not used only for business purposes but also for personal purposes, the person was not entitled to tax credit. "The law clearly distinguishes the economic activity registered for VAT purposes", said Goranov and added: "There is a way to make the distinction between official and personal use; specifically in regard to VAT on cars we have applied to the European Commission to permit us to apply a formula which would significantly simplify the system of taxation".

In reply to a question about the opinion of the Minister of Finance on the "tax on junk food" Goranov said that it was not calculated in the budget for the coming year and had not passed through the chain of coordination. "I do not have final opinion as I have not seen a final proposal for the scope and size of the tax which would enable us to estimate how it would affect the consumption and the market. The objectives of the tax are indisputable insofar as they are related to the health of the nation and if it brings zero revenues it would mean that it had fulfilled its purpose, i.e. I do not see anything fiscal in it", Vladislav Goranov expressed his opinion.

The Minister of Finance is of the opinion that there must be and there will be a debate on a change in the price of vignette stickers. He assured that the budget has the necessary flexibility as to how the final decision about their value would affect the financial plan for the coming year. In his words: "We have to get used to the fact that in a situation of low tax burden there will be more and more payments according to consumption".

„I think that what we manage to do with Boyko Atanasov and Vanyo Tanov is to stabilize public finances so that they are not subject to public debate and to enable the country to be an island of stability in the coming years. For me this is the attestation for the work of the Finance Ministry - when no one is talking about huge deficits, when the state has enough money, when Ministries manage to perform their functions - this means stable government and stable country", the Finance Minister also commented.