The BBC, as usual over simplify the issue and get it completely wrong.
The BBC claims things are cheaper in Bulgaria because wages are cheaper.
A massive oversimplification is ever there was one. I would love to hear their explanation as to why things are cheaper in the USA. Maybe it is because Americans earn less than Greeks?
Of course, their explanation is complete nonsense.
Why are things cheaper in Bulgaria?
Simple. Regulation and taxes are less.
Petrol for example. The BBC says fuel is 30% less in Bulgaria and fuel is over 50% cheaper in the USA. This has nothing to do with wages.
Taxes on fuel are less in Bulgaria and the USA, this is why things are cheaper. Greece used to have tot he cheapest fuel in Europe and the wages were amongst the lowest.
Now Greece has the second most expensive petrol prices in the World and wages are at the same or lower level.
Bulgaria is cheaper than Greece because taxes in Bulgaria are less and it is cheaper to do business in Bulgaria. The wages are dictated by taxes and regulation, not the other way round.
A simple example. If VAT were 0%, people could earn 23% less and still be amble to buy the same amount of things.
Ultimately taxes are by far the biggest influence on prices, not wages. The journo says so at the very beginning of the piece and then comes up with a completely different conclusion at the end.
Tell me what you think, leave a comment.
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