Bulgaria will not cut VAT, excise duties-finmin

SOFIA, July 2 (Reuters) - The Bulgarian government has no plans to cut value added tax or excise duties to ease rising fuel and food prices that have pushed up inflation, Finance Minister Plamen Oresharski said on Wednesday.

The pain of soaring oil prices provoked protests in the Balkan country, where truckers rallied last month to press for excise duty rebates and government help.

Some farm producers have demanded lower value added tax on food to slow accelerating inflation which shot up to 15 percent year-on-year in May, one of the highest levels in the European Union.

"Both theory and practice show that the cut in the value added tax is not directly linked with the price levels in the economy," Oresharski told mass circulation daily Trud.

"I am almost convinced that a possible cut of the value added tax will not have an impact on prices. And a differentiated cut will require a cardinal change of the whole tax system," he said.

The ministry confirmed the comments.

The value added tax in the new EU country is set at 20 percent for all goods and services with the exemption of some tourist services.

Oresharski said the government could not lower excise duties on fuels, because they were lower than those in the rest of the bloc.

Bulgaria's tax policy is consistent and is focused on cutting direct taxes and social security burden to spur economic activity, Oresharski said.

The Socialist-led government, whose mandate expires in the middle of next year, has cut corporate and income taxes to 10 percent and has lowered the social security burden to 33.6 percent from 43 percent.

Sofia runs a tight fiscal policy and targets a hefty budget surplus of at least 3 percent of gross domestic product this year, which industries say gives room for more tax cuts. (Reporting by Tsvetelia Ilieva; Editing by Victoria Main)