Given the impossibility of securing the revenue part of the budget of the municipality of Ruse for 2024. from sale of property, privatization, rents, etc. and on the basis of Art. 22 of the Law on Local Taxes and Fees /ZMDT/, I find it appropriate to update the determined amount of the real estate tax /DNI/. The legislator granted municipal councils the right to set the tax from 0.1 to 4.5 per thousand. Historically, for the entire country /1997-2007/, the amount of real estate tax was 1.5 per thousand. After the opportunity appeared, some municipal councils raised the rates, and in the municipality of Ruse the amount was reduced to 1.2 per thousand. Subsequently, with Decision No. 401, adopted under Protocol No. 16/15.12.2016. of the Municipal Council – Ruse, the real estate tax was raised to 2 per thousand.
Secondly, I would like to bring to your attention an update of the amount of the tax for the acquisition of property by donation and in a remunerative way /DVPI/. The act of the Municipal Council – Ruse, which determined the current amount of 2.2 percent, was adopted in 2009. /Decision No. 447 under Protocol No. 22/29.01.2009/. In the previous years, the lower incomes were compensated by other income sources, which, considering objective factors, marked a permanent growth of decrease.
With the development of a forecast for the period 2024-2026. of receipts from local revenues and expenditures for local activities, a shortage of controls in the amount of BGN 10 million for 2024 is outlined. /without a planned reserve, reduced investment costs, reduced current repair costs/ and a real substantial deficit in the data for 2025. and 2026 According to the Public Finance Act / Law on Public Finances, permanently increasing costs are secured by permanently increasing revenues, such as property taxes and solid waste.
According to the instructions of the Minister of Finance, the forecast for the period 2024. – 2026 is made with the size of the MRZ, as follows:
- 2024 – BGN 933, i.e. by 20% more than in 2023;
- 2025 – BGN 1033, i.e. by 32% more than in 2023;
- 2026 – BGN 1140, i.e. 46% more than in 2023.
In the municipality of Ruse in local activities and in the co-financing of state activities
there are 916 full-time and part-time personnel numbers disclosed.
Given the worsening economic situation with rising prices, the overall average annual index of consumer prices for the previous 12 months was 14.3%, and for the period January 2017 until July 2023 – 41%. MRZ for 2024 compared to 2017 it is expected to rise by 103%, for 2025. by 125%, and for 2026 by 147%.
Another factor that affects the increase in costs is the repayment of principals on long-term loans from banks and the Urban Development Fund of BGN 1.481 million in 2023. to BGN 3.589 million in the next period. Expectations from the sale of non-financial assets are in the direction of a decrease of over BGN 6.739 million compared to 2023.
The above implies a lack of permanent revenues to compensate for the permanent increase in expenses in all budget areas.
For several years there has been a deficit in the Plan-account under Art. 66 of the ZMDT, where costs increase, including deductions under Art. 60 and Art. 64 of the ZUO, and the revenues from solid waste have not been updated since 2012. In this regard, the Municipality of Ruse from 2019 takes advantage of the regulatory opportunities for greater flexibility and efficiency in using deductions and guarantees under Art. 60 and Art. 64 of the ZOU. This state measure also helped in 2023. not to direct an additional resource from own funds to the “Cleanliness” activity, but for 2024 no regulation regarding deductions has been scheduled, which would worsen the deficit in the activity and according to the estimates for 2024. would increase expenses by over BGN 5.472 million. Another factor that will affect in the long term the expenses in the Plan-account under Art. 66 of the ZMDT is the amount of compensation to the supplier, which the municipality will have to provide under the contract for the award of a service of general economic interest /UOII/ for the exploitation of anaerobic treatment and the performance of waste processing activities on the basis of EC decision 2012/21 / EU. According to preliminary data, the annual compensation for the municipality of Ruse will be around BGN 2 million. on the provision of UOII, as the costs for the implementation of the obligations will be covered by all municipalities participating in the Regional Association.
Given the complex and economic situation in the country, there are trends for additional expenses at the end of 2023. and next budget period in all activities due to increased excise duties on fuels and a refund of the 20% rate of VAT on gas. Changes are foreseen in a package of tax laws which, if adopted, will increase the tax and insurance burden on non-employment income, as well as on employment and service personnel due to the sharp increase in the maximum insurance income.
In view of the above, the Municipality of Ruse cannot and should not lag behind in planning and securing more permanent municipal revenues to be used to balance the necessary expenses for a cleaner and more attractive area.
Given the above, there is an impossibility to balance all costs with the current MDT rates, even if the principles of expediency, effectiveness and efficiency are observed. It is necessary to search for a new source of income or increase the existing ones in order to minimize the risk of incurring arrears in connection with the implementation of basic and priority activities and projects, as follows:
For these reasons, the purpose of the proposals is to balance the budget of the Municipality of Ruse. No financial or other means are necessary for the implementation of the new regulations. The expected results of its implementation are an increase in the revenue part of the Municipality of Ruse. At a tax rate of 2 per thousand, according to data from the MDT Directorate of the Municipal Administration, the tax for 2023 is BGN 8,429,308. If the tax is set at 3 per mille, the tax would reach BGN 12,230,000.
The annual plan for 2023 from the second source of income – tax on acquisition of property by donation and in a remunerative manner is BGN 5,000,000. If the rate for remunerative acquisition of property is changed to 2.7 percent, an increase in revenues to BGN 5,800,000 per year is expected.
These BGN 4,800,000 will cover part of the mentioned costs.
The changes are in accordance with the current Bulgarian law, and from there also in accordance with the law of the European Union.
With regard to the tax for the acquisition of property by donation and for consideration /DVPI/ it should be noted that the municipalities positioned by the legislator in I 1 group have determined the amount of the tax for acquisition of property for consideration from 2.8 to 3 per hundred. For the Municipality of Sofia and the municipalities of Varna, Burgas and Plovdiv, the amount of the FDPI is 3 percent. With the proposal for the amount of the property acquisition tax of 2.7 percent, the Municipality of Ruse will be closer to the large municipalities.
With regard to the deadlines for submitting the household waste fee for the year, it should be noted that some of the municipalities have provided for the payment to be made without a discount for those who have paid in advance. For the Municipality of Ruse, I propose to drop the 5 percent discount for those who have paid their obligations in full by April 30, since the new methodology for determining MSW, which has been delayed for years, has led to a deficit in the plan-account for the year. This would lead to additional funds in the budget of the Municipality of Ruse in the amount of BGN 320,000.
It is due to be adopted by the Ruse Municipal Council in December Ordinance amending and supplementing Ordinance No. 20 on hdetermining the amount of local taxes on the territory of the Municipality of Ruse, such as:
§1. In Article 15, Paragraph 1: the number “2” is replaced by “3”.
§2. In Article 35, paragraph 2: the number “2.2” is replaced by “2.7”.
Transitional and final provisions:
§3. In Art. 17 of Ordinance No. 16 on the determination and administration of local fees, prices of services and rights on the territory of the Municipality of Ruse Paragraph 2 is repealed.
§4. The Ordinance enters into force on January 1, 2024.
Pursuant to Article 26, Paragraph 4 of the Law on Regulatory Acts, interested parties are granted a 30-day period for proposals and opinions on the project. The latter can be deposited in the office of the Municipality of Ruse, located at “Svoboda” square #6 /Center for administrative and information services/ or sent to e-mail: [email protected].