Members of the Budget Committee in Parliament on January 7 voted against extending the reduced VAT rate for bread for another year. The proposal, submitted by the "BSP - United Left" party and supported by other parties, was opposed by the Ministry of Finance. The ministry reminded that the measure was initially temporary, aimed at supporting businesses during the COVID-19 pandemic. They also highlighted that the measure costs taxpayers BGN 94 million annually in unpaid revenue. Additionally, the ministry noted that there has been no observed improvement in business transparency since the introduction of the reduced VAT rate.
Bread price hike: Will other bakery products go up in price?
Immedaitely after the reistatement of the 20% VAT rate, some bread producers raised prices by more than 20%, according to a BNT survey. It's still unclear how authorities plan to penalize producers who may have exploited the price changes.
Politicians and businesses are calling for the return of reduced VAT rates for bread and restaurants
The Confederation of Independent Trade Unions of Bulgaria (CITUB) and the Bulgarian Industrial Capital Association (BICA) strongly opposed the reduced VAT rate for bread. During today’s Budget Committee sittting, MPs refrained from discussing the new budgets for the state, the National Health Insurance Fund, and the state social security system. The discussions were postponed to a later date. However, MPs will vote on a temporary extension law to ensure the government continues to function until the 2025 budget is adopted.
Bread prices hike, with increases exceeding 30% in some areas
After voting down the proposals, MPs engaged in a debate over whether they could formally reject the bill, as no amendments to the VAT Law, proposed by the Council of Ministers, were voted on.