EKIP– Expert Club for Economics and Politics A Different Opinion
Continued from Part I
Continuing the conversation about the denial of personal freedom of choice, we will examine how shifting responsibility onto poorly functioning institutions limits our economic freedom in advance.
2) The government and its ministries, agencies and supporting institutions should make sure that every individual dream and goal that is legitimate and just can be fulfilled. Not to servile, for the purpose of personal gain with external alliances. It would be pointless for our state to blindly follow orders as this will not lead to strategic partnerships for the state and its people, but rather to someone's personal fulfillment. Why?
It is important that politicians themselves, whether bureaucrats or diplomats, are aware of their own goals and values, because of which they found themselves at the top of the government of the state they represent. If they fulfill their goals, then they set new ones that will ensure the well-being of the people they lead with a vision for generations to come. This does not mean that people who create laws do not have the right to make mistakes, but it means that when they make a mistake, they will strive to learn as much as possible from it and make the necessary reforms, no matter how unpopular they are. That is, the goal of their government would not be to spend certain amounts (budgets), but to achieve specific goals that would have a certain, real measurable result.
It is important that our leaders do not servilely, do not try to imitate foreign behavior, but put their values and ideas into practice. Alliances and agreements between European/Russian/Chinese or other governments should be chosen strategically, and not simply blindly follow the general rules set by one or another economic partner. Recently, a proposal was made to pay a percentage of the cost of airline tickets for foreign citizens to come on vacation in Bulgaria. I do not understand how any Bulgarian politician could think of such a proposal, let alone announce it publicly?
Such servility can mean several things. A total lack of understanding of how to make the country's economy work better, or a total abdication of responsibility to Bulgarian citizens and agreement with any conditions proposed by foreign countries. In both cases, it is better to remove the responsibility from the top of the pyramid and return it back to the choice of forging economic conditions to the lower level, namely the economic unit or the union between economic agents in an economic territory. In this way, economic agents will have the opportunity to compete for customers with more interesting places to rest, with better service, or will simply reorient themselves to targeting more solvent customers.
3) Why would they want you to accept the idea of higher taxes?
When a government positions itself as not protecting its citizens, when its rulers are known for pursuing individual political careers more than goals related to the well-being of the country they represent, the political class itself positions Bulgarians and their statehood as unprofitable. In other words, we are not very desirable borrowers through our country, because our political class is very volatile and changes its course in response to foreign processes, that is, we are not predictable and desirable as borrowers.
The only option to increase their bureaucracy to appeal even more to foreign interests is by increasing direct and indirect taxes, since the potential for taking good loans decreases, and taking bad loans also lowers the image of the persons who took them. Therefore, every reasonable Bulgarian who aims not to be a criminal, but simply wants to live his life in a normal way - should support the flat tax of 10 percent and the lowest possible VAT rate. In this way, he or she will help Bulgarian politicians learn to operate in reality with scarce resources and find other ways to achieve their personal goals. Ways that would not cost their citizens so much.
Are you satisfied with the implementation of repairs in your city? Are the streets being repaired qualitatively? Does everything happen over a ridiculously long period of 2-3 years or more? Then why would you support the same incompetent people taking even more money from you to continue making incompetent repairs with incompetent solutions? If you have a master in you who ruined your repair, would you call him again and even pay him more than the first time? At the public level, the example is exactly the same - if you are not satisfied with how our institutions operate, why would you want to give them more money to continue to do mediocre work? Isn't it logical to even put them in more difficult conditions, that is, to reduce the VAT rate and generally force them to cope in a more difficult environment with scarcer funds, punishing them for not doing well?
Why does the Bulgarian state budget consist of about 50% of VAT revenues? Why doesn't the government change its harmful habits, learn to "eat healthier," and reduce the VAT rate at least for food?
The Bulgarian government, whether left, center or right, always expresses concern about the level of poverty and helping the middle class to have a better standard of living. As a measure for this, the previous government absurdly proposed a tax on harmful foods. What would this tax do to people who, for economic reasons, buy a "harmful" croissant for breakfast instead of making themselves a healthy one with turkey fillet, special bread and 5 fruits and vegetables - they will not be able to buy the "healthy" food anyway, because for them it is expensive, but they will also eat less often or a cheaper croissant, because its price will also increase.
Let's also look at some facts about VAT on food in the countries closest to us culturally: in Europe. In the latest published report by the EC on this topic, we see clearly that in the category "Foodstuffs" (i.e. all food products), VAT rates in almost all countries are different from those for other goods and services. In Ireland and Malta, food is taxed at 0%, and in most European countries there is a distinction between alcohol and cigarettes and other consumer goods. For example, in Italy, VAT is 4 or 5% on all food, 5% is taxed on their fresh herbs like basil, because apparently Italians would not stop buying them even with 1% more tax, and for cigarettes and alcohol the VAT is 10%.
The extremely low tax on cigarettes and alcohol simply reflects the habits of Italians who like to light a cigarette and drink a glass of grappa or wine with their dinner. In conclusion, I would add that most countries treat food products (excluding cigarettes and alcohol) at a different rate than the generally accepted one, which greatly helps their citizens, due to the greater accessibility of goods that are taxed with a lower tax burden. When you add 20% to the price of 1 lev, this product already costs 1.20 lev. And when you add 5% to 1 lev, this makes the same product 1.05 lev. Think now about basic food products such as meats, sausages and cheeses, for example, for which 20% is added to 10 lev. per kilo and the price becomes 12 lev. per kilo, while they could cost 10.50 lev.
Now remember that there are still countries that prefer to tax such foods with 0% VAT and the price per kilogram remains 10 leva. Isn't this the best way to support economic agents - to give them the opportunity to learn how to make economic choices, to improve their economic behavior, culture and finances?
In conclusion to the arguments presented, I would suggest you read my other article about VAT ( link ) and provoke you to think about which of your economic freedoms is violated the most?
Stay tuned for more on the topic.
