Bulgaria’s right-wing Blue Coalition, which backs the Borisov government, is extremely worried by rumors that the ruling party plant to up the country’s VAT from 20% to 24-25%.

“The Blue Coalition insists that the Prime Minister appear in Parliament and state that there will be no increase of the value-added tax because such a measure would have dire results,” declared Wednesday the coalition’s Co-Chair Martin Dimitrov.

On Tuesday, Dimitrov’s party Union of Democratic Forces announced it had inside information that the ruling party GERB intended to increase the VAT up to 24%-25%, which is even more than the previously floated figure of 22%.

The UDF party has estimated that if the VAT is increase by 2%, this will bring only BGN 700 M more to the state budget.

Earlier on Wednesday, Krasimir Stefanov, the head of Bulgaria’s National Revenue Agency, said that the VAT income raised by the government from January 1 till April 17, 2010, was BGN 600 M smaller than in the same period of 2009.

At the beginning of April Bulgaria’s government approved a 60-measure anti-crisis package in order to close an emerging budget deficit in the first quarter of about BGN 1.5 B. The raising of the VAT by 2% for a period of one year was discussed but was abandoned after it was met by fierce public opposition.

However, Bulgaria’s Prime Minister Boyko Borisov has declared that he would move to raise the VAT without asking anybody what they think if he was forced to do so by the circumstances. He also mentioned that the VAT might have be increased if his government failed to make null and void the so called “hidden” public procurement deals made by the previous Cabinet worth about BGN 2 B, which according to Borisov, his predecessor was aware the state could not afford to pay.

According to the Co-Chair of the Blue Coalition, Bulgaria’s rulers resorted to populist and inefficient measures, and were seeking a way to evade responsibility for the potential increase of the VAT. The Blue Coalition insists on a clear commitment by the state that the VAT will not be increase because the GERB party might later claim it was forced to take such a step, said Dimitrov Wednesday.

The Blue Coalition also called upon the Prime Minister to freeze two large-scale construction projects in Sofia in order to save money – the construction of National Sports Hall and of a “Bulgarian Louvre”, which will cost about BGN 100 M combined.