THE Movement for Rights and Freedoms (MRF) fell deeper into dispute with the Finance Ministry last week, again questioning its restrictive fiscal policy.

The continuing controversy that has followed a proposal by Finance Minister Milen Velchev to shut down duty-free shops at Bulgaria's land borders is far from being resolved.

A group of 23 MPs from all parties in Parliament has reportedly drafted a bill proposing amendments to excise tax legislation that would preserve the duty-free shops.

The lobby of the duty-free trade, led by the MRF, maintained that the Finance Ministry should improve its monitoring functions, rather than closing the shops.

The newly-drafted bill is orientated in this direction, and would impose more frequent inspections at the borders.

The International Monetary Fund Mission which visited Bulgaria last week, outlined the issue as "one of several critical areas".

According to the Fund, apart from political confrontation, the problem raises concerns regarding vested interests. It may not have a crucial effect on the overall budget targets, but reveals links between politicians and suspicious businesses that could easily cause a political crisis given the thin parliamentary support for the Government, the mission said.

While the IMF inspected the financial situation in Bulgaria, tax officers checked up round-the-clock, for seven days, all the 40 checkpoints with duty-free shops. The inspection was announced by Deputy Finance Minister Stamen Tassev on September 13.

"Bulgaria is at present a duty-free zone in relation to cigarettes because import cigarettes without excise-duty labels are sold everywhere," Tassev said.

All 40 border check-points where such shops are located were inspected. Preliminary results showed that duty-free shops sold mainly cigarettes - they made up 99.99 per cent of total sales, Tassev said. According to him, the turnover of the duty-free shops at the small border check-points decreased by three times - about 300 000 leva - during the one-week check-up carried out by the Chief Tax Directorate. The problem was mainly at the small check-points, the inspection showed. Shops which used to sell 40 cartons of cigarettes in a couple of days did not sell a single box during the check-up. The inspection found that one client had bought 744 boxes of cigarettes at once. This did not breach the law, because there was no restriction on the quantity, but it could in no way be called retail trade, Tassev said.

"The duty-free shops are intended to serve the flow of outgoing passengers. Regretfully the check-up showed that three times more cigarettes are bought from incoming passengers," he said.

After the results of the check-up are analysed, the authorities will decide on the fate of the free-shops. Duty-free trade has to be so regulated as not to affect budget revenues, Tassev said.