Next year, salaries in the public-financed sphere will rise by up to 10 per cent and pensions will go up 9.5 per cent, BTA reports. The minimum monthly wage will be 220 leva, up 40 leva from this year's 180 leva. These figures are fixed in the draft 2008 National Budget of the Republic of Bulgaria Act that was considered by the National Council for Tripartite Cooperation on Monday, the Government Information Service said.

Also on Monday, the social partners considered the draft 2008 Public Social Insurance Budget Act.

According to the Swiss rule, pensions will rise by 9.5 per cent as from July 1, 2008 to offset 50 per cent of the inflation rate for the current year and 50 per cent of the contributory income rise from the previous year. The average pension will thus reach 196.40 leva, and the minimum contributory-service and retirement-age pension will increase from 102.85 leva to 112.62 leva. The social old-age pension will be 83.47 leva, up from 76.23 now. The maximum pension will be unchanged at 490 leva (35 per cent of the maximum contributory income for the previous calendar year).

Salaries in the public-financed shere will be raised by up to 10 per cent as from July 1, 2008. Further rises are possible if the administrative and institutional structures are optimized.

Natural persons' income of all types will be taxed at a flat 10 per cent rate next year, and the tax threshold will be abolished. The only exception will be the income accruing from economic activity to sole traders, which will be taxed at 15 per cent. People earning wages of up to 430 leva under an employment contract and civil servants with salaries of up to 375 leva will be compensated for the introduction of the flat tax as from January 1, 2008.

As from next year, the licence tax will be levied according to the procedure of the Local Taxes and Fees Act, and the proceeds will go into the municipal budgets. So far the licence tax was regulated by the Income Tax on Natural Persons Act.

Social insurance contributions will be shared between employers and employees in a ratio of 60 to 40 in 2008, compared to 65:35 now. As a result of the change in the scale and amount of the personal social insurance contributions, the population will keep a disposable income of 180 million leva.

The maximum monthly contributory income for the self-employed will be increased from 1,400 leva now to 2,000 leva next year, and the minimum income will rise from 220 leva to 240 leva.

The minimum monthly unemployment benefit will be unchanged from this year's 90 leva, whereas the maximum will be 190 leva, up from 180 in 2007. The monthly child benefit will become 190 leva, 10 leva more than its level at present.

The corporation tax rate will remain 10 per cent, and the value added tax rate 20 per cent next year. Bulgaria charges the lowest profits tax among all EU Member States and this attracts investments and boosts the competitiveness of the economy.

With a view to reaching the minimum levels required in the EU, the excise duty on cigarettes will be raised by 33 per cent in 2008, ahead of two other rises by the same margin in 2009 and 2010. The excise duty is increased gradually so as to avoid steep rises in cigarette prices and ease inflation pressure.

The excise duty on unleaded petrol will be increased from 635 leva to 685 leva/tonne according to the schedule agreed with the European Commission. The respective increases for gas oil will
be from 535 leva/t to 600 leva/t, for kerosene from 485 leva/t to 535 leva/t, for coke and coal from 0.30 leva/GJ to 0.40 leva/GJ, and an excise duty of 1.20 leva/MWh will be charged on electricity for economic and administrative needs.

Provisions are made for the following excise duty rate rebates: for mixtures of petrol and bioethanol in which the bioethanol content is from 2 to 5 per cent inclusive: 671.3 leva/tonne, comapred to a 685 leva/tonne standard rate for petrol; for mixtures of gas oil and biodiesel in which the biodiesel content is from 2 to per cent inclusive: 588 leva/tonne, compared to a 600 leva/t standard rate for diesel.

The excise duty on coffee and on coffee extracts will be abolished in 2008. The effective rates on beer and spirit drinks will be unchanged.

Under the draft 2008 Public Social Insurance Budget Act, the contributory income thresholds will be raised by 26.24 per cent. The average monthly contributory income is expected to be
464.52 leva.

The public social insurance budget revenues for 2008 are expected at 3,786,772.60 leva. Of these, 61.3 per cent will come from social insurance contributions paid by employers for their employees, 32 per cent from employees' own contributions, and 4.23 per cent from contributions paid by self-employed persons.