Local taxes change less in 2022 compared to the previous two years
Which municipalities have the lowest and highest local taxes? To answer this question, the Institute for Market Economics (IME) collects data on the rates of several key local taxes through applications under the Access to Public Information Act and additional online surveys related to the "Regional Profiles: Development Indicators" study. The specific taxes examined are:
- Tax on real estate - non-residential properties for legal entities
- Tax on the remunerative acquisition of property
- Tax on vehicles and light automobiles with power exceeding 74 kW up to 110 kW
- Annual patent tax for retail trade up to 100 sq.m. net commercial area of the facility
- Tax on taxi transportation of passengers
The interactive map below presents a composite index of the tax burden in the 265 municipalities in the country. The levels of the five observed local taxes are normalized and averaged for each municipality and placed on a scale from 0 to 100, where 0 represents the lowest permissible tax burden according to the law, and 100 represents the highest. The actual indices for each municipality fall within the limits of the two constructed virtual municipalities, applying respectively the highest and lowest permissible rates for all the taxes considered.
Interactive version of the map
The map allows us to easily see which municipalities impose the highest tax burden on their residents. Sozopol is the municipality with the highest index value - 80.3. It is followed by the Sofia Municipality, where, however, the tax burden is significantly lower (68.4). The next positions are mainly occupied by municipalities along the Black Sea coast with an index level above 60 - Varna (64.7), Primorsko (64.7), Plovdiv (63.8), Pomorie (63), Burgas (62.9), Tsarevo (60.9). The municipalities with the lowest taxes are Kaloianovo (19.4), Medkovets (19.5), and Breznik (20.4), and the regions with the lowest rates are Vidin and Montana.
Looking back in time, we can see how often taxes have changed over the years. The graph below shows all cases of changes in taxes on real estate for legal entities, remunerative acquisition of property, vehicles with power from 74 kW to 110 kW, as well as the patent tax for retail trade with an area of the commercial facility up to 100 sq.m. We see that local taxes are less likely to be changed in years of local elections, such as 2015 and 2019, as we have commented before. It is also notable that as the election year approaches, fewer municipalities are inclined to increase local taxes. Decreases in tax rates are much less common than increases, although they have become more frequent in recent years. Interestingly, in election years, very few municipalities ease the tax burden.
For this year, there are 57 cases of increased taxes and only 19 cases of decreased taxes, breaking the record of the highest number of decreased rates in the past two years. The most changes occur in the tax on real estate - 23 increases and 7 decreases. For the other rates, changes are significantly rarer - there are 14 increases for the tax on remunerative acquisition of property, 12 increases for the tax on vehicles, and 8 increases for the patent tax for retail trade. Decreases are 2, 6, and 4, respectively.
