Topical Information

Cooperation between businesses and municipalities, modernization of local tax policies, financial autonomy of municipalities and a new model for waste management were the main topics around which representatives of nationally represented employers' organizations and NAMRB united their positions. The forum, which met in a working dialogue responsible business and local authorities, was held under the initiative of NAMRB. Vasil Velev - Chairman of the Board of the Bulgarian Industrial Capital Association (BICA), Stefan Chaykov - Member of the Board of BICA, Kiril Jeliazkov - Member of the Board of BICA - Member of the Board of BICA, Dobrin Ivanov - Executive Director of BICA, Dobri Mitrev - Chairman of the Board of the Bulgarian Industrial Association (BIA), Vasil Todorov - Secretary General of the Bulgarian Chamber of Commerce and Industry (BCCI),  Radoslav Petkov - Chairman of the Managing Board of the Council on Innovation, Digitalization and New Technologies - BCCI and Lyubomir Peynovski - Member of the Board of Confederation of Employers and Industrialists in Bulgaria (EIBG) were among the participants.

The President of the Economic and Social Council Zornitsa Rusinova also took part in the meeting

The Test of Hard Decisions

The mayors said that the past mandate was one of the most complex in the history of local government. The pandemic, the military and energy crisis, high inflation and political collapse have become serious tests for the local government, which alone has preserved its stability and activity.

"We had to make very difficult decisions - to protect people's lives and health, or to preserve businesses that feed families. Inflation forced us to terminate contracts to feed children in kindergartens. The inability to catch up with the price spike forced us to stop investment projects underway and choose whether to violate the instructions of the managing authorities or to become accomplices in the closure of construction companies, "said the Mayor of Troyan and Deputy Chairman of the Board of NAMRB Donka Mihaylova "We do not want to be one of the people who are fighting for survival. It's time to sit down at a table and talk about the problems that bind us together and, in certain situations, divide us. If we do not find solutions today, at least we can outline the steps to solve them," she added.

 30% freedom

The Mayor of Samokov and a member of the NAMRB Management Board Vladimir Georgiev presented the alarming trend of permanent loss of autonomy of municipalities. Local budgets are heavily dependent on government transfers. If in 2010 they were 60% of the funds, in 2019 they are already 64% of the municipal budgets. "This significantly limits the ability to make decisions according to the specific needs of people in a municipality and to develop local policies," Georgiev said. In addition to the very limited revenue sources, municipalities are also faced with the need to finance the activities delegated by the state, said the mayor of Samokov. With less than 30% of the funds in the municipal budgets, it is practically impossible to plan any local policies, underlined Vladimir Georgiev. He presented to employers the model for financial decentralization prepared by NAMRB, which includes as first steps the assignment to municipalities of 20% of the proceeds from the personal income tax  and 10% of the corporate tax, without increasing the tax burden neither for citizens nor for businesses.     

Competition and Privilege

Within the framework of the topic of financial decentralization, a frank conversation was held on two other extremely important topics: expanding the scope of property taxes and updating tax assessments, which have not been changed in the last 25 years.

There are economic sectors in which businesses do not pay taxes by law, said the Mayor of Dimitrovgrad and Deputy Chairman of the Board of NAMRB Ivo Dimov. "I know that the big pain of the business is related to the "household waste" fee. I hope that together with the business we will find the formula for a fair distribution of this fee so that it not be a burden for the business, Dimov added.

In the competitive environment, the rules should apply to everyone, the representatives of the business organizations were their definite opinion.

The Executive Director of NAMRB presented the plan for the development of different models for calculating waste management fee (WMF) on the principle of "polluter pays". NAMRB will actively support municipalities in the process of switching to new models for determining the fee. In the Environment Program 2021-2027 (POS 2021-2027), the Association will be a specific beneficiary of the project "Models for optimizing the process of municipal waste management by municipalities in Bulgaria", within which the new methodology for determining the fee will be developed and should be used simultaneously by all municipalities in the country, Georgieva said.

Crosscutting point

Dobri Mitrev, Chairman of the Board of BIA

"I do not believe that at this table there is a person who does not want the welfare of Bulgarian citizens and Bulgarian business. I believe that with joint efforts we can do what depends on us for the prosperity of all." He recalled that BIA since 2007 raises the topic of calculating WMF and according to him the fair solution is one – separate waste collection. According to BIA, the application of the "polluter pays" principle has long been delayed.

If we manage to introduce separate collection, calculating the fee on the basis of municipal waste generated will not increase the burden on citizens. That is why we have to educate our children, society, to reach every taxpayer and convince him, Dobri Mitrev was adamant. One of the components of WMF – for the maintenance of public spaces, should inherently be a tax, not a fee, the business believes. The other two components that make up the waste disposal fee must be determined according to the volume of waste generated.

"We're burying resources. This is a crime against the Earth and the children, "said the Chairman of the Board of BIA.

BIA has always looked very responsibly at the problems of municipalities, said Dobri Mitrev and did not spare the criticism of his colleagues. The main one is in the sluggish administrative procedures. The "time" factor is extremely important for the realization of any economic activity and municipalities must be understanding, be expeditious and flexible. "This municipality, which demonstrates adaptability to the new time, will win over entrepreneurs to invest in it," said the President of BIA. He admired the initiative of NAMRB and expressed hope that the dialogue will continue at expert level.

Vasil Velev, Chairman of the BICA Management Board

The claim that taxes in Bulgaria are low is a marketing gimmick. They are at a level significantly above the European average. Low taxes alone cannot attract investors. They also know how to consider and seek security and understanding, emphasized the Chairman of the Board of BICA .

He expressed support for the idea part of the taxes to be conceded to municipalities and readiness for reasonable solutions to seek joint support from politicians. It is important for the business not only to be attracted to a municipality, but also to be detained, said the Chairman of the Board of BICA . There are many factors by which investors assess the favorable conditions in a region and local administrations should be interested in them and develop them. That is why together – employers and NAMRB, we could give the award "Municipality with the best business climate", proposed Vasil Velev.

The second serious problem facing investors is the shortage of human resources and BICA also sees an opportunity to consolidate efforts with municipalities.

Kiril Zheliazkov, Member of the BICA Management Board

One of the most serious challenges is the introduction of separate waste collection and the motivation of citizens to do so. Kiril Zheliazkov gave a successful example of the introduction of the vending system in Gabrovo Municipality. The municipality has created the right incentives for citizens: parking, free access to sports facilities, access to theatre, etc. This activates people and the results achieved in the first year exceed expectations, Zheliazkov said.

Stefan Chaykov, Member of the BICA Management Board, Chairman of the Management Board of the Roads Chamber

There are more common points in the work of our organizations than the problems and this is a guarantee that we can successfully overcome them. The Roads Chamber has already initiated a joint meeting between the of NAMRB and BCC Management Boards to coordinate positions before the vote on the 2024 budget. According to him, in dialogue with the institutions, all problems related to the municipal road infrastructure and the republican one, which passes through key places of the municipalities, can be raised.

On the issues of indexation of contracts and additional financing of construction activities, solutions can also be sought jointly, says Stefan Chaykov.

Vasil Todorov, BCCI Secretary General

Municipalities should strive to introduce uniform standards for the provision of administrative services. Why in Sofia Municipality online check for lack of obligations can be made, but in other municipalities it can not? The presence of many procedures and different requirements is among the serious problems in the work of the municipalities that businesses report.

BCCI expressed readiness to support municipalities that build industrial zones, including a serious expert team.

The common problems in which efforts can be united to seek adequate solutions are many and BCCI expresses readiness for more active cooperation with NAMRB

The first meeting – starting point

As partners who, despite the problems, continue to make efforts in the name of good solutions for people, we have achieved something very important – we turned this first meeting of ours not into a report and a balance, but a starting point for future joint work, said in conclusion of the discussion the Mayor of Troyan Donka Mihaylova. She shared the satisfaction of her colleagues with the common understanding and the general attitude that things cannot and should not continue in this way.

Local authorities and businesses expressed their common opinion - the dialogue is a clear message that both municipalities and businesses are ready to walk the difficult path to overcoming complex issues.

Specific initiatives were also identified that are to be implemented in the near future.