Politicians and businesses are calling for the return of reduced VAT rates for bread and restaurants

There are growing political calls to reinstate a 0% VAT rate for bread and 9% for the restaurant sector. The leader of "Movement for Rights and Freedoms (MRF) - New Beginning," Delyan Peevski, pinted out that the people and businesses should not bear the cost of political instability. Meanwhile, the restaurant industry is waiting for the parliament and the budget committee to start work and pointed out that it has the support of 4 parliamentary parties for returning VAT rates to pre-New Year levels.

Georgi, a baker for 10 years, began the New Year not only with a 10% wage increase but also with higher bread prices in a small bakery in one of Sofia's old markets.

"This one used to be 2.80 BGN, now it’s 3 BGN. This one was 2.50 BGN, now it's 2.60 BGN," Georgi explained, adding that most customers had anticipated the price increase.

BNT: How do people react when you tell them the new prices?

Georgi: It doesn't even impress them, more than people expected it.

"I'm not quite sure how much more expensive it is".

BNT: On average you bought bread about 0.30 BGN more expensive.

"Since I don't often buy from here, it's a bit of a luxury to come to this bakery and generally I've budgeted at least 5-6 BGN for two loaves. That's it, unfortunately."

Despite the higher VAT rate of 20%, up from 9%, which was introduced as an anti-crisis measure during the COVID pandemic, the restaurant industry has called on establishments not to increase prices on their menus. If this is not adhered to, however, price hikes are inevitable, the sector warns. The restaurant industry has gained support for a VAT reduction from GERB-UDF, "Vazrazhdane," "MRF - New Beginning," and "BSP - United Left."

"We have sent letters to all members of associations nationwide, notifying them of what is happening and urging them not to raise prices. In the restaurant industry in Bulgaria, there is a psychological price threshold that cannot be exceeded, as it would be unaffordable for the average Bulgarian," said Richard Alibegov, from the Bulgarian Association of Restaurants.

Amid rising costs, including electricity and water prices, and the halting of compensation programs, the sector says it will have no choice but to adjust prices if the VAT rate remains at 20%.

The industry estimates that the current issue is not only the VAT but also the overall taxes paid into the state treasury, which have increased by 250 million BGN compared to 2019.

"From January 1, the minimum wage increased, followed by hikes in electricity, water, and the prices of all fruits and vegetables. Every day we receive emails from producers and suppliers raising prices for various reasons. When you add the VAT on bread and baked goods, along with our VAT rate, the pressure becomes unbearable. We have 5-6 measures to address the 18 billion BGN burden, for which we bear no responsibility—this is the result of the incompetent financial management by finance ministers over the last four years, which the business sector is now forced to carry," said Richard Alibegov, from the Bulgarian Association of Restaurants.

"The industry has, over the last two to three years, cleaned itself of many non-compliant colleagues—you like that term, 'cleaned up'," commented Emil Kolarov from the Bulgarian Association of Restaurants.

In a statement from "MRF - New Beginning," the party announced that it will submit a proposal to maintain the VAT exemption for bread and flour, and to keep the 9% VAT rate for the restaurant industry.

The first meeting of the Parliamentary Budget Committee is also scheduled for tomorrow.

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