CONSUMERS will absorb the impact caused by the increase in the excise on fuel recently announced by the Government.

Manufacturers and traders warned that they would make no further compensation for the taxes, and would raise the price of fuel.

At the end of 2002, the producers of Lukoil Neftohim and some leading traders signed an agreement saying that the petrol price would not go up, although the excise duties were raised by 50 leva a ton in 2003. This year such an agreement will not be signed, the Finance Ministry said.

Similar changes are expected to happen with cigarettes.

The retail price of a box of the most popular brand, Victory, is expected to rise from 1.20 leva to 1.54 leva next year when their excise duty rates will also go up. The price of Marlboro cigarettes is expected to increase from 3.70 leva to 4.50 leva a box.

The figures were released by Kalina Zlatanova of the Finance Ministry during a seminar at the Borovets winter resort on November 2.

Amendments to the Excise Duties Act envisage rise in excise duty charged on filter cigarettes from the current 0.002 leva a cigarette plus 40 per cent of the market price, to 0.004 leva per cigarette plus 40 per cent of the market price. Excise duty charged on non-filter cigarettes will increase from 0.001 leva a cigarette plus 15 per cent of the market price, to 0.002 leva a cigarette plus 15 per cent of the market price.

Excise duties on petrol will rise from 604 leva a ton to 652 leva for 1000 litres. The same duty on gas oil will change from 404 leva a ton to 466 leva for 1000 litres, the increase for propane gas is from 260 leva a ton to 360 leva for 1000 litres.

As a result, the price of A95 petrol (unleaded) will rise by 3.9 per cent, and that of propane gas by 12.7 per cent, according to Finance Ministry figures.

Bulgaria has to start negotiations on the implementation of excise duties on electricity, natural gas and coal. This was announced at the same seminar. The new duty is required by the European Union and is one of the conditions for EU accession in 2007. The EU suggests that the excise duty on electricity should be 0.5 euro a megawatt for business customers and one euro for all other customers. The tax on the natural gas will be 0.3 euro a gigajoule for business customers and 0.15 for heating. The duty on coal will be 0.15 euro for business customers and 0.3 for all other customers. Most candidate countries have negotiated periods of grace regarding these taxes. Bulgaria will ask for the same, the Finance Ministry said. If Bulgaria does not manage to negotiate a new scheme for reaching the rates of the EU till 2007, fuel will become more expensive by eight per cent each year till 2007.

The arguments behind the planned legislative changes concerning fuels is to transform road and anti-pollution fees into equal excise duties and to change the base unit from "leva a ton" to "leva for 1000 litres" in accordance with EU requirements.

As regards both fuels and cigarettes, the idea is to gradually raise excise duty rates to the minimum levels adopted in the EU. At the same time, excise duties charged on cigars will be reduced. Excise duty cuts are also planned for coffee extracts (such as instant coffee) and powdered coffee-based mixtures (such as cappuccino).

In connection with its future accession to the EU, Bulgaria has pledged to introduce a flat excise duty rate for filter and non-filter cigarettes.