The grey market in Bulgaria

Dnevnik newspaper looks into the reasons for the persistently large "grey" markets in Bulgaria. "The reluctance of workers (and employers) to pay taxes on everything they earn results from the huge insurance burden. Despite the low flat-rate tax, most people do not correctly indicate their income [because of the high social insurance contributions]. ... The minimum insurance rate (and the corresponding minimum wage) stimulate tax evasion. Company managers know that the state views low incomes as normal, and that makes it easier to commit tax fraud. In fact a large number of employees earn much higher salaries. On the other hand, raising the minimum wage would have catastrophic consequences, such as boosting unemployment and further expanding the grey market."

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