Where do people's incomes come from?

People's incomes can come from various sources. For the majority of people in Bulgaria who work, this is their salary. They are employed by employers under an employment contract as employees or workers. However, others prefer to work for themselves, such as entrepreneurs and people who practice a freelance profession – lawyers, translators, architects, and artists. A person can also receive income if they own some property that they rent out – for example, an apartment or land, as well as if they have a bank savings account or have made some kind of investment. Pensions, scholarships for students or unemployment benefits are also a type of income.

 

What income can children have?

Of course, children's incomes are usually limited and are most often related to pocket money or gifts given by their parents for holidays such as birthdays, Christmas, etc. You can also earn small amounts of money by helping your elderly neighbour with their shopping or walking their dog. Another option is to use your talents – for example, drawing or making beautiful crafts to sell. The first and most important task of children your age is to go to school to acquire knowledge and skills that they will need in life. As an exception, some children from 15 to 16 years old can work and earn an income from it. However, there are very strict requirements for the type of work – it must be light, not dangerous or harmful to health, and not interfere with regular school attendance. Another exception is for student positions in circuses for girls over 14 years old and boys over 13 years old. And for film making, preparing and performing theatrical and other performances, children under 15 years old can also participate, but under lighter working conditions. In all cases, a medical report and permission from the state body that monitors compliance with labor laws are required. The employer has the obligation to provide suitable lighter working conditions and regular medical examinations. If you start such work, you must conclude an employment contract, which is signed by a parent or guardian if you are under 14 years old. If you are between 14 and 15 years old, you can conclude the contract, but only with the written consent of your parent or guardian.

 

Why are there taxes?

People earn money in different ways, but not all of the amount remains with them, because a part of it is paid to the state as tax.

What is a tax? A tax is an amount of money that people and businesses are obliged to pay to the state. This money is needed so that the state – central and local governments – can finance important public services that it provides to citizens, such as:

•         Education – schools, textbooks for students, teachers’ salaries

•         Health care – hospitals, ambulances, doctors

•         Roads and transport – streets, sidewalks, city buses

•         Security – police, fire department, army

•         Social benefits – support for people who cannot work or are in a difficult situation.

Taxes are of different types depending on what is taxed – i.e. what they are paid on.

For example, when your parents work and receive a salary, part of that salary goes to the state as tax. It is called income tax. People with freelance professions also pay such a tax. Businesses pay tax on their profit, which is left after paying all expenses.

The amount of this tax can be determined in different ways. In some countries, the higher the income of a person or business, the more tax it must pay. It is assumed that people and businesses that earn more can contribute more to society. Elsewhere, as in Bulgaria, every person or business pays the same percentage of tax, regardless of how much they earn. This has some disadvantages, especially for people with lower incomes, who feel the burden of the tax more, because for them every penny is more valuable.

Consumers pay a value-added tax (VAT), which is included in the price of every good or service they buy. So, when you shop at a store, you pay the tax that the merchant pays to the state.

These taxes are paid to the National Revenue Agency, which is a central government body. However, there are also local taxes, which are paid once a year in municipalities - for example, if your family owns an apartment or a car. In this way, the municipality collects money for street repairs, lighting, parks, and other local needs.

In addition to taxes, people also pay other obligations to central and local governments. Among the most important of these are the mandatory social insurance contributions, which are paid by all those who have income from work. Thus, when they retire, they will be able to receive a pension depending on how many years they have worked and what social contributions amount they have paid, and if they get sick or lose their job – they will receive support from the state. Other mandatory insurance contributions are health insurance contributions, which are paid by everyone, regardless of whether they work or not.

One part of employees' insurance is paid by employees themselves, and the other part by the businesses they work for. However, people with freelance professions pay the entire amount independently.

Other obligations citizens pay to local authorities, are fees for various services. One of the most important is a garbage fee, with which municipalities ensure the collection and disposal of garbage. In some municipalities there is also an annual fee for owning a dog as a pet.

In most cases, taxes are paid automatically. For example, when your parents receive a salary, the employer directly withholds the necessary tax and transfers it to the state. When purchasing goods and services, VAT is included in their price.

Businesses, freelancers, property, or car owners are required to complete and submit a tax declaration, as well as to pay their tax once a year or within certain deadlines.

 

What happens if you don't pay your taxes?

Failure to pay taxes is a serious offense that can result in fines or even the seizure of property. It prevents the government from providing the necessary funds to provide important public services that help make society a fairer and safer place.