site.btaPodkrepa Trade Union Proposes Progressive Income Tax, Measures for More Equitable Fiscal System

The Podkrepa Confederation of Labour has put forward a package of proposals for what it describes as a “realistic and reasonable reform of Bulgaria’s tax and social security system”, aimed at ensuring budgetary sustainability. The union’s recommendations are outlined in an analysis of the 2026 consolidated fiscal programme, prepared by Podkrepa’s chief economist, Atanas Katsarchev.

One of the key proposals is the introduction of a progressive income tax and a non-taxable minimum for individual incomes. The union also calls for an end to the practice of applying a zero-tax rate to exported added value, arguing that this allows profits to leave Bulgaria “without a single cent remaining in the country”.

Podkrepa strongly opposes any increase in VAT from 20% to 22%, warning that such a measure would further erode the purchasing power of working people and shift the tax burden onto employees. According to the analysis, raising VAT would increase the prices of goods and services, fuel additional inflation, and harm household budgets.

The union also proposes a gradual increase in the maximum social insurance income in three stages, reaching BGN 8,500, in line with the Social Security Code.

Regarding revenue measures, Podkrepa suggests raising the tax on dividends to 10% in order to align the taxation of different income sources.

The union further calls for: increasing child care benefits for children up to two years of age; setting the paternal (or adoptive father’s) child care allowance for children up to eight years old at a level equal to the minimum wage; raising the one-time benefit paid upon the death of an insured person in proportion to the growth of the average insurance income.

At the same time, Podkrepa emphasizes that social security contribution rates should not be increased. Instead, economic, social, and fiscal policy decisions should aim to engage high-income earners more actively and reinforce solidarity within the social insurance system.

Finally, the union proposes a 13.6% increase in public sector wage expenditures.