Bulgaria’s Parliament on Thursday turned down a proposal to increase tax on interest earned from bank deposits to 10% from the current 8% from 2015.

The proposal was submitted by the centre-right GERB party, the biggest partner in the coalition government.

The Parliament rejected the motion in second and final reading in a 95-77 vote with four abstentions.

While the head of the Budget and Finance Committee in Parliament, Menda Stoyanova (GERB), supported the proposed increase, saying it would ensure equal treatment of personal income irrespective of its sources, Tasko Ermenkov from opposition Socilaist Party said 80% of all deposits in Bulgarian banks were ‘’savings for a rainy day” in the amount up to BGN 1,000 each and shouldn't be subject to taxation.  

The Budget and Finance Committee also turned down the proposal two days ago.

The 10% tax was introduced from in 2013 by the previous GERB government (2009-2013), incorporating earnings on interest into Bulgaria's flat tax rate policy. Former Finance Minister Simeon Djankov said back then that the government wished to ensure the equal tax treatment of income by introducing the new levy.

The Socialist-led government that took office in 2013 and resigned in July 2014 decided to phase out the tax by cutting it by two percentage points a year. The first cut, to 8%, took effect from the beginning of 2014.

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