In 2008, Bulgaria introduced a flat tax rate of 10% on income and corporate profits. Together with the absence of tax breaks for low earners or reduced VAT rates for basic amenities, this makes Bulgaria’s tax system regressive. This policy paper shows that Bulgaria’s flat tax has contributed to soaring levels of inequality in the EU’s poorest member. It argues for the gradual re-introduction of progressive taxation, for which it provides two quantitatively substantiated transition models.
Kassabov, Ognian, Atanasov, Ivaylo and Vanya Grigorova. 2019. Flat Tax or Democracy? Towards a Progressive Tax Reform in Bulgaria. Sofia: KOI & Solidary Bulgaria.