The National Revenue Agency and the National Customs Agency are the main authorities engaged in revenue collection. They collect taxes and excise duties that go to the state budget. The two institutions have reported record-high revenues. The National Revenue Agency collected EUR 13.14 billion by November, which is EUR 1.89 billion more as compared to the same period last year. VAT revenues, revenues from personal income tax and corporate tax are to the tune of EUR 7.52 billion, the National Revenue Agency’s Executive Director Rumen Spetsov said.

The National Customs Agency also contribute significantly to the revenue collection. In October this year, the total monthly revenue from excise duties and VAT hit record highs –  EUR 499 million, which was 14.4% more (EUR 63 million) as compared to the same month last year. Between January and October 2021, revenues from excise duties, VAT on imports and fines, are to the tune of nearly EUR 4.5 billion.

What caused the impressive increase in public finance revenues?

On one hand, this is evidence that Bulgaria’s economy is in a relatively good condition and generates moderate profits, which are subject to taxation. Moreover, personal income tax places second in terms of revenue sources, which is in line with the steady growth of incomes- the higher the incomes, the higher the taxes levied on them and therefore the revenues collected. Unfortunately, the annual inflation in the country has exceeded 6%, which has a negative effect on the purchasing power. On the other hand, however, higher inflation contributes to increased state revenues due to the higher sales prices of goods and services. The two agencies engaged in revenue collection deserve recognition, because they use efficient tools to make revenue collection more effective.

Analyzing the growing state revenues, financiers lay the emphasis on a very important topic – what this country’s authorities should do with these additional financial resources?

Traditionally, state expenditures are highest in the last months of the year. It will become clear whether this trend will continue when we see the December data. According to Bulgaria’s caretaker cabinet, this money should be used to reduce the budget deficit or contribute to a budget surplus. This is happening against the backdrop of significantly increased social expenditure and financial aid provided for businesses amidst a Covid-19 and an energy crisis.

Bulgaria is a welfare state and a market economy. It performs its functions through the distribution of financial resources. In this regard, it is very important for the state authorities to strike the right balance, because taking excessive amounts of financial resources from the business has a negative affect on economic growth and incomes. Bulgaria redistributes nearly 40% of its gross domestic product, i.e. the private sector has most of its revenues at its disposal.

English version: Kostadin Atanasov