Draft 2027 Budget Draws Criticism over Taxes, Spending and Fiscal Consolidation

Bulgaria’s draft 2027 State Budget Act has drawn criticism from several employers’ organisations, trade unions, representatives of the judiciary and the Fiscal Council, with concerns ranging from the proposed 33% tax on excess profits and higher social security contributions to insufficient spending reforms and the financial implications for public-sector employees. While most employer organisations have voiced support for the budget in principle, albeit with reservations, trade unions remain divided, and the Fiscal Council has warned that the planned deficit reduction may not be sustainable.
The Fiscal Council has called for permanent expenditure cuts equivalent to around 1% of GDP, or approximately EUR 1.4 billion, arguing that the draft budget does not provide sufficient guarantees that Bulgaria will follow the EU-mandated corrective path. It said the planned consolidation relies heavily on one-off revenue measures, the conclusion of the Recovery and Resilience Plan and expenditure ceilings not backed by concrete measures.
The Council also questioned the Government’s revenue projections, estimating that the planned EUR 1.926 billion from revenue measures was overly optimistic compared with its own estimate of around EUR 1.3 billion. It particularly challenged the projected EUR 800 million in revenue from the one-off 33% excess-profits tax, estimating that it would generate approximately EUR 211 million. According to the Council, if the identified risks materialize, the deficit could remain between 3.4% and 4.4% of GDP through 2029. It recommended additional permanent spending reductions and a fiscal buffer of at least 0.5% of GDP below the net expenditure ceiling each year.
The proposed excess-profits tax is also the main point of disagreement among employers. The Bulgarian Industrial Association (BIA) supports the draft budget with serious reservations and has called for the tax to be withdrawn, warning that it undermines predictability and could discourage investment. The Bulgarian Chamber of Commerce and Industry (BCCI) has likewise opposed the measure, describing it as subjective and inconsistent with market principles. Both organisations have also raised concerns about higher public debt and called for greater transparency regarding planned savings and borrowing.
The Bulgarian Industrial Capital Association (BICA), meanwhile, has voiced support for the budget, welcoming the preservation of the main tax rates, a higher VAT registration threshold, accelerated depreciation for certain technologies and measures intended to reduce administrative burdens. It has nevertheless opposed raising the maximum social security contribution base to EUR 2,400 and increasing minimum social security contribution thresholds by 6.4% across economic sectors. The Confederation of Employers and Industrialists in Bulgaria (CEIBG) has also backed the draft, while calling for more decisive expenditure reforms.
Trade union positions are more divided. The Confederation of Independent Trade Unions in Bulgaria (CITUB) has offered conditional support, arguing that savings rely too heavily on cuts to capital expenditure and subsidies. It has called for changes to income policy, including the abolition of the 7% tax on food vouchers, as conditions for its support. The Podkrepa Confederation of Labour has rejected the draft, citing insufficient increases in personnel expenditure, the minimum wage, pensions and social benefits, as well as concerns over persistent inequalities and poverty.
The proposed changes have also prompted opposition from judicial employees. The Supreme Court of Cassation (SCC), supported by 159 members of its staff, has objected to measures affecting the judiciary, warning that they could undermine its financial autonomy, reduce administrative capacity and make it harder to recruit and retain qualified personnel. The draft budget would remove the annual clothing allowance for court employees, retaining only an allowance for judicial robes capped at EUR 500.
Employees of the Sofia Regional Court have separately warned that changes to taxation could reduce their take-home pay despite rising living costs. They said court clerks, secretaries and archivists currently receiving a minimum net monthly salary of EUR 717 could see it fall to EUR 667 in January 2027, while the maximum net salary for these positions would decline from EUR 878 to EUR 817. They stressed that the clothing allowance had effectively supplemented low salaries and that the proposed changes had not been accompanied by an adequate assessment of working conditions and responsibilities.
The Education Trade Union of the Podkrepa Confederation has also opposed restrictions on teachers’ clothing allowances and professional development funding, warning that they could undermine legally established rights and the quality of education. The union has additionally called for the withdrawal of the Bulgarian Language Bill, arguing that it would create administrative burdens without offering effective solutions to improve literacy.
Presenting the Government’s position, Deputy Prime Minister and Finance Minister Galab Donev said the draft budget sought to restore the sustainability of public finances while maintaining support for incomes, families and investment. The Government projects a cash-basis deficit of 3.5% of GDP in 2027, falling to 3.1% in 2028 and 2.4% in 2029. It also plans a 5% increase in personnel expenditure at first-level budget spending units from January 1, while allocating EUR 170.5 million for a 7.5% pay rise for teachers.
Other planned measures include higher family benefits, an increase in the monthly childcare allowance to EUR 450, and a rise in the minimum daily unemployment benefit from EUR 9.21 to EUR 13. Government debt is projected to reach EUR 44.3 billion, or 31.4% of GDP, in 2027, with new borrowing of up to EUR 8.6 billion envisaged.

Draft 2027 Budget Draws Criticism over Taxes, Spending and Fiscal Consolidation THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2026-11-12 08:23:00

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