Mediapool Weekly: June 30 – July 6, 2018

Green Light for Peevski Media Bill, Sin Tax for Smokeless Cigarettes Strikes as High Level Lobbying

Green Light for Peevski Media Bill

Ruling coalition GERB and the United Patriots supported the bill of the media owner and opposition MP Delyan Peevski. It has been instilled that the bill aims to achieve more transparency in the media landscape although there is an alternative bill that aims just authored by the government. In its latest report Reporters Without Borders (RWB) identified Peevski as being directly responsible for Bulgaria sinking to 111 place in the World Press Freedom Index (WPFI).  

This is the consecutive Peevski-authored bill that the ruling majority supports.

The so-called Peevski bill provides for all media outlet owners to disclose information regarding “any received financing during the previous year, its amount and reason, as well as data about the entity, which made it.

The measure is entirely redundant as this information is already publically available on the donors’ websites and at the Ministry of Justice. At the same time, the bill will not shed light on the ways in which the Peevski media receive financing, which is predominantly through bank loans, because the bill excludes bank loans from the type of information to be disclosed. His media famously took grand loans from the since bankrupted Corporate Commercial Bank (KTB).

The vote for Peevski’s legislative initiative seemed to be agreed upon beforehand, although the MPs have not debated the bill in the committees, which is the standard practice of Parliament. The bill came to a vote via a special procedure, which gives the opposition the right to introduce a proposal directly to Parliament vote every first Wednesday of the month.

In fact, BSP’s Anton Kutev was the only one who openly voiced his disproval during the debate, and particularly because Peevski was the one introducing the bill. In his words, the bill only aims to polish Peevski’s image and passing the bill would be “a crude violation of public opinion”.

“I cannot possibly give my support for the bill … because for me this bill is the next step towards the degradation of the state.”

In his words, with this bill “we are telling the Bulgarian people that there are some people in the country who can do whatever they please and not anyone – even Parliament – can do anything about it.

It is no secret that one of the main problems with democracy in Bulgaria is intertwining politics with businesses, and sometimes to a colossal extent.

He said that he cannot convince his constituency that Delyan Peevski is not the very embodiment of this intertwining.

At the very least, his simultaneous being in and out of Parliament as his political influence is enormous.

Delyan Peevski himself was not present for this, as he rarely is.

DPS MP Yordan Tsonev (co-author of the Peevski bill)defended Peevski and the bill with talking points that can easily be found all over Peevki’s own outlets:

Peevski has been accused by the democratic press - which is nothing more than a fake news factory – that he is a monopolist. When this very bill aims the opposite: to shed light on the media landscape.”, he said.

Not passing this bill is in favor of all those who produce fake news, it favors their smears becoming truths in the eyes of the people. There is no evidence that the claims about Peevski are true”, he concluded.

MPs from GERB and OP declared their support.

The leader of the Parliamentary group of the United Patriots, and leader of ATAKA, Volen Siderov replied to Kutev that “if he has a personal problem with Peevski, he should go behind the corner and solve it”.

GERB’s Vezhdi Rashidov, who chairs the Culture and Media Parliamentary Committee, which failed to find the time to debate this bill for five months, said that “the public must be informed of the real owners and the ways of financing of media outlets.

We should know that [the bill] is not just Delyan Peevski’s

Bulgaria to Introduce High Sin Tax for Smokeless Cigarettes

The sudden decision of the main ruling party GERB to increase the sin tax of smokeless cigarettes caused outrage not only among consumers of the product but stirred a scandal among the coalition partners, which was quickly put to rest. The decision, as its motivation, however, demonstrated deep political inadequacy and indefensible motives, which further affirmed the belief that the proposal is a result of lobby pressure.

PM Boyko Borissov apparently took the lobbying allegations to heart stopped GERB introducing the tax but that held for only about few days. He was especially taken by VMRO, who at the time was against the tax, and who implied that Borissov is working for Delyan Peevski’s interests, without naming him. VMRO used the popular referral to Delyan Peevski, since the time of the 2013 protests against him becoming head on the State National Security Agency (DANS), “koy”, meaning ‘who’. The referral is the result of slogans asking ‘who’ actually governs the country behind the scenes. Delyan Peevski is said to be the actual owner of Bulgartabac, hence the allegations for lobbying for him specifically.

Next morning the head of GERB’s parliamentary group Tsvetan Tsvetanov declared that after talks with the United Patriots, they’ve finally decided to withdraw the proposal. They will make a ‘more elaborate assessment’ and the sin tax will increase in a way that it will amount to 50% of the conventional cigarettes’, instead of double that, as was the initial plan. 

At the moment the new product is taxed as cut tobacco, which is 26% of regular cigarettes taxation.

The proposal targets only one product: IQOS and the sticks for it, the so-called Heets. The products are sold in Bulgaria by Philip Morris. According to Phillip Morris’s estimates, the sticks’ price was going to increase from 5.50 leva to 10 leva on October 1.

The increase was to be enacted as early as October 1. This, however, would have contradicted the Public Finances Act, according to which tax and social security changes cannot be made within the framework of a current budget.  

Due to incompetence or as a conscious attempt to mislead the public, Tsvetanov announced that EU member states’ practice is for the sin tax for the smokeless cigarettes to be 70% of the tax for conventional cigarettes. That’s not the case, however. The average taxation of smokeless cigarettes in the EU is not 70% but 31%. Currently, in Bulgaria, the sticks are taxed at 26%. In Germany, the number is 28%. The highest tax is in France – 67%.

The Chairwoman of the Parliamentary Budget Committee Mendi Stoyanova and her colleagues from GERB defended the abrupt increase of the sin tax citing the need of budget revenue. The economic purpose, however, of the indirect taxation is the decrease in consumption of harmful products and not to be a source of budget inflow.

In addition, GERB entirely ignores the studies, including independent ones, which demonstrate that smokeless sticks are less harmful than conventional cigarettes.

Menda Stoyanova openly stated that the reason for pushing forward the measure at this time is because the government has underrated the speed at which demand for smokeless cigarettes has developed on the Bulgarian market. Doubling their price in effect would push away the smokers who have chosen a less harmful alternative and would ultimately stop the products from entering the Bulgarian market. This would favor the rest of the cigarette companies and especially the market leader British American Tobacco who bought Balarama’s main cigarette brands a year ago.

By most estimates, the tax would add no more than 15 million leva to the budget.

Another highly disturbing fact is the thusly stated objective by the government to limit revenue of companies through specially tailored legislation.  “Our goal is not to increase the price of cigarettes but to lower the revenue of companies so that this money enters the budget,” Tsvetan Tsvetanov said.

Menda Stoyanova tried to shift the question towards the product’s safety: how do we know these cigarettes are less harmful?

“Maybe we are a testing site for the effects these cigarettes have on smokers. We will see in time what those are. And that would be the job of the World Health Organizations, which usually need years to determine whether a product is more harmful, less harmful or as harmful compared to its alternative. It’s no coincidence that the US health organization has now rejected these products entering the market, twice, because of unproven lower harm.”

Some observers and analysts of the tobacco market assume that a tax will do nothing more than push consumers to acquire the sticks from neighboring Ukraine, Serbia or even Greece. The former two sell the products at much lower prices compared to Bulgaria; the sticks are not cheaper in Greece yet but if the tax is introduced in full, they will be.

After some days of controversy and debates finally, MPs decided that the sin tax will be introduced for the smokeless cigarettes but in stages. It is likely that the tax will amount to 70% of the conventional cigarette tax. At the moment, according to Menda Stoyanova the current tax is about 26% of the regular cigarettes.

 Volen Siderov, leader of ATAKA took a rather populist approach in rationalizing the tax.

“Increasing the sin tax … which will be done in stages will be combined with the fact that part of the revenue from this sin tax will go to the ones most in need. Mothers of children with disabilities have been here for weeks [Siderov is referring to the month-long tent protest of parents of children with disabilities in front of Parliament, demanding social policy reform] do why not use that money from smoking and direct it towards people with disabilities. I’ve discussed this with the Finance Minister. I’ve been lobbying for a long time for building a new hospital in Yambol – my constituency. The whole region has been waiting for a hospital for 20 years. … why not part of this money [from the sin tax] be directed to meet exactly such needs?”

Representatives of the ruling coalition refused to answer whether that is populism or not, seeing how PM Boyko Borissov told journalists he is ‘sick’ of populism only several days ago.

No Success in Fight Against Illegal Logging in the Country

According to a report by the Wildlife World Fund (WWF) and the coalition “For the Nature” Bulgaria has made no advance at all and has demonstrated no results of the fight against illegal logging in the country. The measures that the government has implemented between 2006 and 2017 has resulted in no change to the gray sector.

Illegal logging in Bulgaria amounts to a third of all logging and generates revenue of an estimated 150 million leva per year. A previous such report covered the period between 2006 and 2013. The new data does not show any improvement in comparison. Measures that the governments implemented during the period – like electronic tickets, e-auctions and e-trade – do not work, mostly because the old procedures are still allowed. That is, e-tickets, for example, are merely an option, and as the hard-copy tickets are the ones illegal loggers forge, they continue using them the same as before. Electronic trade accounts for 3.5% of all recorded procedures. Manipulated markings on the trees and logs continue to be made just as before; forest rangers are still a scarce number and soon.

Regarding the last point, lack of human recourse, the report acknowledges that many new measures have been introduced over the past five years but the problem of who will implement them on the ground was neglected.

The report recommends that the forest agency be taken out of the Ministry of Agriculture and to become an independent control body. Another important point is building a national public database that will include all stages of logging.

Valeri Simonov: The New Fuels Act is “Repulsive” and Favors Lukoil

Vice PM and leader of the United Patriots (OP) Valeri Simonov described the new fuels bill, which was introduced to Parliament by his fellow party member Emil Dimitrov, as “lobbyist” and favoring Lukoil and other large companies. Simeonov declared he is against the continued monopolization of the market.

“The new fuels bill is a revolting lobbyist bill, aimed at favoring large fuel companies, foremost Lukoil and others like them, who have captured 80% of the market”, Simeonov told the Bulgarian National Television (BNT).

“What we have here is advancing lobbyist texts via certain individuals. It is not true that the bill is introduced by the United Patriots. My friend Emil Dimitrov introduced it.”

Here he stressed that in his view the only goal of the bill is to give the market to several companies.

“You know about Lukoil, where Valentin Zlatev is, and who is a friend of Emil Dimitrov’s.”

He went on to remind that “over the last 10 years Lukoil Neftohim - Burgas” has paid zero stotinki to the state in tax because the company registers losses.”

“Meanwhile, Lukoil’s mother company, Lukoil -  Russian Federation registers 120-150 billion leva in revenue. You understand that what we have here is draining revenue.”, he concluded.

The bill for administrative regulation of economic activities connected with oil and products, derived from oil was introduced to Parliament by all political parties in Parliament and passed first reading. The bill’s primary promoter is OP MP Emil Dimitrov, known also as Revizoro. According to Simeonov Dimitrov is close friends with Lukoil Bulgaria head and Chair of the Bulgarian Gas and Oil Association (BPGA) Valentin Zlatev.

Emil Dimitrov is the Chair of the Parliamentary Anti-Smuggling Committee, which was tasked to undertake the second reading of the bill. The bill ultimately passed with the votes of GERB and the Bulgarian Socialist Party (BSP). The session was chaos at best. Most MPs were asking what they are voting throughout the session. Emil Dimitrov frequently assured that the texts will be further polished by parliamentary experts after the session. The important thing, Dimitrov repeatedly stated, was for the MPs to agree on the general notions of the bill. At the same time, the bill is packed with important details and a ‘general notion’ strictly speaking, can hardly be extracted and agreed upon with a single yes or no.

One VOLYA MP requested that the separate proposals for amendments be voted on separately but Emil Dimitrov rejected. Valentin Nikolov of GERB said that it was extremely difficult for him to follow what exactly they are voting on.

Dimitrov made every effort to kick out TV journalists from the session and succeeded for a time, but they came back a while later, arguing their right to witness the session.

Lukoil Bulgaria and BPGA, in which all the large fuel companies are members, both voiced their support for the bill. Small and medium companies, however, have been protesting it for a month. According to them if passed and enacted, this bill will wipe out their businesses. The foremost reason: the bill introduces a very large minimum starting capital for a fuel company. Small and medium fuel companies also claim the bill is a lobbyist one and serves the interest of Lukoil Bulgaria and the large franchise companies.

Some MPs have withdrawn support from the bill, following the protests.

Valeri Simeonov: Sofia Is a City of Quid Pro Quo and Political Umbrellas

Sofia is the city in which the laws take a step back to give way to acquaintances, quid pro quo and political umbrellas, Vice PM and leader of the United Patriots (OP) Valeri Simeonov wrote in a Facebook post. He announced he will be undertaking operations against the noise in the city. The main ruling party GERB has been governing Sofia entirely (having a sitting mayor and a majority in the city council) since 2007; current PM Boyko Borissov was elected for Sofia Mayor in 2005, to be replaced in 2009 by Yordanka Fandakova, who has been mayor ever since.

Valeri Simeonov was pleased by the establishments’ owners’ reactions to his checks.

“It turns out that introducing order within the framework of the Noise Act in Sofia is kid’s play compared to going against the mafia ridden Sunny Beach. There haven’t been any problems. Where ever we went, there was peace and quiet behind us. The owners are fully aware of the violations. They turn off the sound systems at the first warning.”, Simeonov wrote.

Sofia Administrative Court Recognized a Same Sex Marriage

The Administrative Court of Sofia has recognized the marriage of a same sex couple, who married in 2016 in France. Mariama, who is French and here wife Christina from Australia move to live in Sofia a year after they marry. Christina receives a residence permit, which is taken away in 2017 on the grounds that Bulgaria doesn’t recognize same sex marriage, hence, she cannot receive the permit on the grounds that her wife is a EU citizen.

Meanwhile, however, the EU court ruled that married same sex couples have the right to residence within the EU as long as one of the partners is a EU citizen.

This ruling affected the outcome of the Sofia’s Administrative Court’s ruling. The Sofia Administrative Court holds that a member state does not have the right to deny residency of a third county national if they have married a EU citizen. By the ruling the Bulgarian state now recognizes Mariama and Christina’s marriage although same sex marriage is not yet permitted in Bulgaria.

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