Bulgaria's Demographic Decline and Flat Tax Policy Contribute to Income Inequality

Bulgaria has been identified as the EU country with the highest income inequality, a situation exacerbated by the implementation of a flat income tax system. According to the World Bank's new Partnership Framework with Bulgaria for 2025-2029, inefficient use of state budget funds, coupled with the budget's small size relative to the country's gross domestic product (GDP), has resulted in inadequate financing for essential public systems, thereby compromising the quality of public services.

The demographic trends in Bulgaria are further deepening the urban-rural divide....