GERB leader Boyko Borissov at a news conference in Sofia, Bulgaria, June 2024. Photo, EPA/VASSIL DONEV.
Despite criticisms by the opposition, professional associations and business analysts, Bulgaria’s ruling coalition on Friday submitted a 2026 state budget doubling the dividend tax on private businesses to fund a rise in public-sector wages.
The changes are widely seen to be a way for the coalition to satisfy loyal voters in the public sector. More than 558,000 work in state-owned structures, according to the latest 2024 data from the National Statistical Institute.
“Discussions with worker and employers unions were аvoided because those in power did not want to hear from the organisations and revise the financial plan. Adopting a budget without prior discussion is a precedent and a violation of the Labour Code,” the weekly newspaper Capital wrote on November 14.
“In a populist way, all of this shifts the burden onto businesses and workers, discourages investment, slows economic growth, expands the grey economy, and will ultimately reduce budget revenues,” the Association of Bulgarian Employers stated on November 12 – and criticised the lack of debate.
The move is a risky gamble, as private businesses are struggling ahead of the adoption of the euro on January 1, amid protests against the European currency and fears of inflation, mostly powered by pro-Russian and nationalist voices.
State workers, police, military personnel, teachers in state schools, social service workers and pensioners all stand to benefit from the public-sector wage rises.
The budget will work on a 3-per-cent deficit and on estimated economic growth of 2.7 per cent. The national debt is expected to reach 31.3 per cent of GDP, with the maximum amount of new national debt that can be incurred set at 10.44 billion euros.
The budget doubles the dividend tax from 5 to 10 per cent. An increase of 2 percentage points in the contribution to the Pension Fund is envisaged. The maximum insured income will increase to 2,352 euros. The tax on gambling rises from 20 to 25 per cent The minimum wage will now be 620.20 euros in comparison to 477.05 euros in 2025.
A total of 11.3 per cent of GDP will go towards updating pensions. From July 1, 2026, these will rise by 7 to 8 per cent. The average pension will reach just over 541 euros, a nominal increase of 8.5 per cent, while the minimum pension for full service and age will be almost 347 euros, compared to 322 euros in 2025.
There will be wage rises for hospital medical staff, specialist doctors, nurses and midwives, with 260 euros million transferred from the central budget to the National Health Insurance Fund.
The ruling coalition – constituting the centre-right force GERB, the pro-Russian Bulgarian Socialist Party and nationalist There’s Such a People, with the support of New Beginning, led by tycoon Delyan Peevski – is also seizing and selling the assets of the Russian-owned gas giant Lukoil, to avoid US sanctions and issues with fuel supplies.
