Amid calls for cutting down rates of value-added tax (VAT) and excise duties, in light of high inflation and price hikes, Finance Minister Plamen Oresharski said that the Government had no plans to take such measures.

Year-on-year inflation in May was 15 per cent, up from 14.6 per cent in April, with more inflationary pressure piled from the utility prices hikes on July 1.

In a July 2 2008 interview with Bulgarian-language Trud daily, Oresharski said that Bulgaria had to soften the impact of recent tax cuts and a planned decrease in social security contributions on budget revenue.

The latter were cut to 33 per cent, from 43 per cent, with the Government's plans being for an additional cut by two percentage points at the start of next year. The VAT rate in Bulgaria is flat at 20 per cent.

The state budget relied on VAT and excise duties revenues, Oresharski told Trud. Furthermore, he said, excise duty rates in Bulgaria were still below the minimum rates in the European Union.

"Even if we cut down the VAT rates prices will not go down because they are not directly related to one another,” he said.

The latest call on the Government to introduce different VAT rates for different groups of goods came from right-wing opposition party Democrats for a Strong Bulgaria on July 1 2008.

Party leader Ivan Kostov, a former finance minister in 1992 and prime minister in 1997/2001, asked Prime Minister Sergei Stanishev to report to Parliament what measures the Government planned to take in reaction to high inflation. The party asked for state relief payments to pensioners and people relying on social welfare.

The next general elections in Bulgaria are scheduled for the summer of 2009.