Bulgaria Finance Ministry Criticized for Cutting Food Vouchers

Bulgarian businessmen and associations criticize Finance Minister Simeon Djankov's decision to cut down distribution of food vouchers. Photo by BGNES

Bulgaria's Finance Ministry has decided to cut the amount of food vouchers it circulates to commercial companies, in a reaction to the crisis and in order to maximize budget revenue.

The scheme, which has operated for several years, became popular among commercial companies with the introduction in 2007 of tax benefits for employers giving food vouchers to their staff. Vouchers were originally worth BGN 40 per person per month, and in 2009 the amount was raised to BGN 60.

The Finance Ministry has now reduced the amount available for the scheme, with BGN 171,6 M allocated for 2010, compared with BGN 213 M in the previous year.

The cutback has been criticized by employers and by business associations. They claim that the move will actually cost the state BGN 65 M in revenue. This calculation includes BGN 53 M which companies will not be paying as social security contributions and a further BGN 12 M as profit tax.

The business sector has also claimed that there is unfair competition and even some illegal trading in food vouchers.

Voucher operators are licensed by the Finance Ministry as a link between government and companies and stores. New operators appeared in 2009, and received an equal share of the total voucher quota.

This has meant that some operators have been unable to service new companies and have even had to drop existing clients. There are also allegations that some operators are receiving their quota but are not using it.

Business interests have also accused the ministry of not taking into account the fact that, by using vouchers, employees increase the turnover and profit of stores. That in turn, they maintain, brings additional VAT and corporate tax to the budget, in addition to encouraging economic development and employment.

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