Paying Taxes: A Question of Honor: Charged with Increasing Revenues, Bulgaria's New Tax Agency Seeks to Change the Public's Mind-Set

Article excerpt

In 2000, in support of the democratic reforms and the economic restructuring occurring in Bulgaria, the World Bank and the International Monetary Fund joined with several other nations in offering both advice and financial assistance toward the establishment of a new national revenue administration system for the country. This was the beginning of the Revenue Administration Reform Project (RARP), which has proved to be the largest and the most successful public administration reform project in Bulgaria, involving the largest number of employees (9,000) and concerning the country as a whole. The RARP's main goals are to maximize the level of voluntary taxpayer compliance, to promote effectiveness and efficiency, and to reduce the potential for corruption.

"A well-functioning economy must have a good and reliable tax system, which collects revenue efficiently and treats taxpayers properly," said representatives of the World Bank in 2003. A new tax system was also a requirement for Bulgaria's accession to the European Union.

Previously, Bulgaria's revenue collection responsibilities were divided between the General Tax Administration Department and the National Social Security Institute. Since 2001, Bulgaria had undertaken a number of initiatives to improve its tax administration. But it was clear that the country needed to create both a unified revenue agency that collects taxes and social insurance contributions, and a reliable tax information system to match the needs of the country as a future EU member state.

The answer was the National Revenue Agency (NRA), established in 2005. The NRA's main goals are to improve revenues and to prepare Bulgaria for EU accession, but it has other objectives as well: to simplify and introduce new payment methods, including Internet-based methods; to provide "clients" (that is, taxpayers and contributors to the country's social security programs) with the necessary information about their duties; and to improve voluntary compliance and achieve better results for the sake of the country and the society.

Under the NRA, a new centralized revenue system fosters voluntary compliance, introduces improved tax collection and stricter state control, and has lower administrative costs. It maintains a common database, supports the development of the private sector and limits the functioning of the shadow economy. The agency secures the country budget by collecting the due income tax, value-added tax (VAT), patent and corporate taxes, health insurance and pension contributions, and mandatory pension insurance payments, as well as other funds, including the teachers' pension fund. It supports a national database and effectuates an international exchange of information.

Nobody likes taxes

Promoting simpler tax collection is not an easy thing. No one likes to pay taxes, and Bulgarians are no exception. Everyone complains that taxes are too high--even though a comparative analysis of the tax rates in European countries shows that Bulgaria's is among the lowest.

At the NRA, we decided that the best approach toward effective communication would be not to directly attack the belief that taxes are too high but to gradually overcome it. That is why the agency's executive director, Maria Murgina, announced early on, "We cannot make the paying of taxes and insurances more pleasant, but we can make it easier and more useful." The main PR steps were based on messages of civic duty and the societal benefits of paying taxes.

The NRA made the constant improvement of customer service its priority, extending a hand to its clients. The goal was to stimulate the voluntary declaration and payment of taxes and to build a new tax culture in a country where it was quite normal to talk about tax evasion. Simply put, we had to convince people why we should all pay our taxes promptly.

In addition to the traditional communication initiatives, we were looking for new approaches to make our strategy more open, focused and successful. …