Optimal fiscal policy slashes income tax rate to zero in Bulgaria.
The study looked at how different types of taxes and government spending affect the economy in Bulgaria from 1999 to 2018. They compared two scenarios – one where the government makes decisions based on what's happening, and one where they make decisions to maximize benefits. The results showed that having no income tax is best in the long run. Also, the optimal amount of public services should be three times lower than what is currently provided. To fund these services, a consumption tax of 18.3% is needed, which is slightly lower than what is currently in place.