【正文】 ted in Table 1 to be % of GDP a year, would bring another 147 million leva in budget revenues. This takes a GDP figure of billion leva as a base from the national budget forecast. Third, fewer jobs would be lost/more jobs created (130,000 in total) and hence fewer people would need unemployment benefits. In particular, the 2020 budget foresees 6% unemployment, while the tax reform would result in percentage points less unemployment than in the absence of reform. On , the improvement in the labor market would generate about 25 million leva. Table 3: Dynamic Effects of the Tax Reform Scenario (tax reduction) 1. Gray economy effect 293,940,000 205,758,000 393,879,600 2. Added GDP growth dynamic effect 146,970,000 102,879,000 196,939,800 3. Lower unemployment spending 25,270,975 17,689,683 33,863,107 Total dynamic effect 466,180,975 326,326,683 624,682,507 Source: Authors’ calculations. Net Effect Taking both static and dynamic effects into account, under the base scenario the reform would cost 379 million leva, or about % of GDP. Reform under the “l(fā)ow” scenario would cost 227 million leva, or % of GDP. Reform under the “high” scenario would cost 500 million leva, or % of GDP. Table 4: Net Fiscal Effects of Proposed Tax Reform Scenario (tax reduction) Total static loss 845,438,323 553,126,461 1,125,150,208 Total dynamic effect 466,180,975 326,326,683 624,682,507 Net Effect 379,257,348 226,799,778 500,467,702 Net Effect as % of GDP % % % Source: Authors’ calculations. 7Sensitivity analysis In all of the calculations of the dynamic effects we include the effect of the tax cut for business but we do not include the beneficial effect of the reduction in taxes for the workers in the estimates. Thus, under the base scenario we leave aside a third of the tax cut and its benefits which make calculations more conservative and dynamic effects are underestimated. It can be expected that in a normal environment the positive effects of the tax reform would be higher than our base scenario. On the other hand, the effect of the financial crisis might be expected to be negative. For example, if the gray economy effect is half of the estimate, the total dynamic effect will be about a third lower than we calculate. Thus, our conservative approach toward the dynamic effects is justified under crisis (although after the crisis is over, the full positive impact of the tax cut will quickly appear). 4. ConclusionsThe calculations in this paper show the benefits and costs of reforming taxes as a crisis response measure. The reform is illustrated with the example of payroll taxes in Bulgaria, but the findings apply generally to both other countries in Eastern Europe with relatively high payroll taxes, and to countries in other regions (most notably South Asia and Latin America) which have a high tax burden on businesses.ReferencesDjankov, Simeon, Tim Ganser, Caralee McLiesh, Rita Ramalho, and Andrei Shleifer (2020), The Effect of Corporate Taxes on Investment and Entrepreneurship, NBER Working Paper No. 13756, Cambridge, Massachusetts.Mladenova, Adriana (2020), Pension Reform Options, Institute for Market Economy, Sofia, Bulgaria.Ramey, Valerie (2020), Identifying Government Spending Shocks: It39。 and in 2020, 4 The Doing Business database presents a breakdown of all taxes that businesses pay. For example, the tax burden for Albanian panies is available at 5 See Mladenova (2020).3percentage points. Payroll tax can be cut within the fiscal year6, unlike other taxes that cannot be changed within the year.Bulgaria is only one example of a country with relatively high payroll taxes. Businesses in Belarus, for example, pay 35% of the gross salaries of workers in payroll taxes. Businesses in Romania pay about 30% of gross salaries. In Poland, %. Countries in Asia and Latin America have generally high taxes on business, although not specifically linked to workers’ wages. Colombia, for example, taxes nearly 78% of profits away from the business, in various types on national and municipal taxe