HOW WE ACHIEVED VICTORY IN BULGARIA’S “WAR ON CASH”

On September 14, 2017, Bulgaria’s Finance Ministry tabled a proposal to lower the upper limit on cash payments to 5,000 Bulgarian levs (the equivalent of EUR 2,500 or USD 3,000) from 10,000 levs as part of an overall tax reform package related to VAT and some excise taxes. Cash restrictions of such scope would lead to significant changes for many Bulgarians, who still mostly rely on cash payments for many of their purchases, like second-hand car sales. The justification given for why such tightening of existing financial regulations was needed, however, was that it would reduce the size of the shadow economy and bring in more tax revenue.

In recent years the issue of regulations on cash payments has grown to be more and more important in all member-states of the European Union. There has been a widespread push towards stricter and stricter cash payment regulations across the entire EU, which has been stimulated and nudged forward by the European Commission. Some EU member states like Greece and France have already enforced very strict regulations on cash payments. In France, the limit on cash payments has been EUR 1,000 since 2015. It is even lower in Greece.

While cash payment restrictions have been passed with ease in these members states, such attempts have been met with widespread outrage in others, with the prime example being Germany, where the public quite vocally expressed its opposition. The issue has been growing in importance in the past several years to the point that it is now one of the most talked about financial regulations in the EU.

In Bulgaria, the same proposal that was tabled in September was already rejected in parliament just two months earlier, back in July, in large part thanks to the public campaign which the Bulgarian Libertarian Society (BLS) undertook against it. In effect, and without planning for it, this became the biggest policy issue for BLS over the summer and autumn months – and arguably the entire year of 2017. The reason is simple – financial freedom is paramount. Every citizen should have the freedom to pay for the goods and services that he purchases in any matter that he sees fit. Moreover, such regulations also hurt the business environment and have a pronounced negative economic impact.