EKIP– Expert Club for Economics and Politics A Different Opinion
Alongside the policy of accumulating budget deficits and refusing to implement reforms, between the first and second readings of the budget law, a good idea emerged, albeit rather timidly – that at least the money of the poorest does not belong to the state. Although they will not be exempt from paying the 10 percent income tax, the collected funds will be returned to individuals at the end of the year.
Implementing this may create technological difficulties. For example, the inability to return the collected money. Although it would be most appropriate for the income of people receiving social assistance not to leave them at all, certainly refusing to seize funds even from a part of the population is a step in the right direction. Also, returning it will consume administrative and personal resources that could be invested in more productive activities than exchanging money back and forth – i.e. to approach not returning it, but not collecting it at all.
An even better way to reduce the tax burden would be to ease the VAT rate, which is currently at 20% for most goods and services. The effect of removing the value-added tax would have an immediate impact on people by reducing the prices of consumed goods and services. The lower VAT would also provide fewer incentives for fraud and theft through its refund procedure.
Tax cuts are a much better social measure than all kinds of state aid and budget redistribution, because they provide an opportunity for a working person to dispose of his income and money himself, instead of waiting for special handouts from the administration and its political leadership. It turns the position of a person from one who is in a position to be given to him, into one who disposes of the fruits of his labor.
The problem with such "reductions", "tax exemptions" and so on is that the state will collect less money than without the reduction. However, state spending is at best constant, and in the typical case - increasing. And this lost money has to come from somewhere. And it will come in the form of additional taxes on the middle or upper class, i.e. precisely those who drive the state the most. For this reason, I see no reason for joy. Some part of society will be "benefited" with fanfare, while another will take it away without even a word being mentioned in the press, if anyone pays attention at all.
The point is to also reduce spending. But when we talk about falling taxes - that can't be bad.
@Stoyan Panchev
You can't separate the question from the context. If you just ask the question, "Is tax cuts a good thing?" the only possible answer is, "Yes, they are." But it's also a good thing that everyone has something to eat, and that justifies the existence of welfare systems. It's also a good thing that older people can support themselves without having to work, and that justifies the existence of the state pension system.
Is it good for people to have security against terrorist attacks? It is good! And therefore we can eavesdrop without hindrance. If someone is against eavesdropping, it follows that they are against people's security. This is what taking a question out of context leads to.
And I haven't heard about reducing state spending. And I don't see how a left-wing government would do such a thing (even if it were a "right-wing" government, it still wouldn't do it). Therefore, some group will bear the consequences of this reduction. The question is which one exactly?
A small note - not most goods and services are subject to VAT, but all.