site.btaIndustrial Capital Association: Budget 2026 to Hit Over 2 Million Workers’ Incomes

Over 2 million people working in Bulgaria’s real economy will face reduced incomes if the proposed Budget 2026 is adopted, General Assembly of the Association of Industrial Capital in Bulgaria (AICB) Chair Vassil Velev said on Saturday.

Since 1996, we have not had a worse budget, Velev noted. He appeared alongside Bulgarian Industrial Association (BIA) Deputy Chair Maria Mincheva on Sedmitsata, a programme on Darik Radio.

Velev said more than 2 million employees in the private sector, those who fill the budget with their taxes, will end up with lower net incomes due to the increased labour tax burden. He called this the greatest error of the proposed budget, describing it as the worst in the last 30 years. Velev argued that the draft State budget for next year is unfair to working people, “digging into their pockets, taking out BGN 50-60 per person and about BGN 100 per family each month, and giving it to further increase already high public sector salaries in security and justice.” According to Velev, Bulgaria already ranks first in the European Union for public sector wage spending as a share of GDP. He added that the budget takes from 80% of workers and reallocates resources to the other 20% employed in the public sector, where salaries have long outpaced what the economy can support.

Mincheva warned that business’s fears of rising tax burdens are becoming reality, though she added that no real discussion of reforms is underway. She said that funds collected by raising social security contributions by two percentage points and increasing the dividend tax would be “a drop in the ocean.”

Velev predicted that the current situation will lead to growth in the shadow economy. He said these disorderly, chaotic government expenditures boost informality, and that the grey sector is tackled by lowering, not raising taxes. Velev said the authorities have lost all trust. “You can’t claim for five years that taxes will not rise, and then raise them suddenly. You cannot pass a law in 30 seconds amounting to a kind of nationalization and still claim property rights and legal certainty exist. Who would invest in such a country?” Velev asked.

On the planned dividend tax hike, Velev said this would push more activity into the informal sector and predicted a loss of investors from Bulgaria.

Among her recommendations for Budget 2026, Mincheva highlighted the need to revoke automatic mechanisms, determine an objective formula for the minimum wage not linked to the average wage, introduce effective programme budgeting with clear institutional targets, and expand both e-services and the use of artificial intelligence in public administration. For the medium and long term, she emphasized the need to improve education at all levels to boost productivity.

Velev said the Association would insist that taxes remain unchanged, and called for optimization in the administration, judiciary, and security sector: “We have thousands, tens of thousands of unfilled positions across these systems. Cuts could begin there,” he added.

Asked whether tripartite dialogue resumed after employer organizations boycotted an National Council for Tripartite Cooperation (NCTC) session, Velev said there is no point in participating as long as such a budget is on the table. “We started restoring the dialogue with a meeting with one of the four parties in government. Obviously, meetings with the other parties, together or separately, are needed to discuss a different budget,” he said.

Asked if the Association of Industrial Capital in Bulgaria would attend another NCTC session next week or boycott it again, Velev said the Management Board would decide. “I would advise and insist we stay out unless the budget is revised,” Velev said.

BIA Deputy Chair Maria Mincheva commented that dialogue should not turn into a "tripartite monologue," which she believes is the current situation with the NCTC. Mincheva added that updated documents should reflect the discussions; otherwise, both sides risk losing out.

She said that the association’s leadership will consider the BIA’s involvement in a future NCTC meeting.

On Wednesday, the Finance Ministry published the 2026 Draft State Budget and medium-term forecast, targeting a 3% of GDP deficit, lifting the pension contribution rate by 2 pp from Jan 1, 2026, and signalling higher dividend tax. The plan also allows up to EUR 10.4 billion in new debt.

Employer groups and opposition parties blasted the draft, prompting a called-off NCTC session and a subsequent government-employers meeting; senior officials, including the President and Vice President, also issued sharp critiques.