The Budget and Finance Committee of the National Assembly dismissed the proposal of Bulgaria's main governing party GERB to increase the tax on interest earned from bank deposits from 8 to 10 %.

The proposal of the Citizens for European Development of Bulgaria (GERB), which had been opposed by all other parties, had been made between the first and second reading of the amendments to the Value Added Tax Act, the electronic daily Dnevnik reports.

According to Menda Stoyanova, Chairperson of the Budget and Finance parliamentary committee, the rise of the tax would have boosted the revenues of the government budget with additional BGN 80 million.

Stoyanova urged voting in favour of the increase in the sake of doing justice to the taxation system.

The tax on interest earned from bank deposits was introduced in 2013 during the first government of Prime Minister Boyko Borisov, on the initiative of former Finance Minister Simeon Djankov.

The Socialist-led government of Plamen Oresharski reduced the tax from 10 to 8 % in 2014.

The acting legislation foresees the tax to decrease to 6 % in 2015, a further reduction to 4 % is expected in 2016, until it will be completely abolished in 2017.

The proposal of the Socialist party for the tax to be maintained at 6 % for next year, was also turned down.

The members of the committee supported the proposal of Dimitar Tanev from the Reformist Bloc, GERB's coalition partner, to keep the tax at 8 %, but to extend the range of bank services subject to tax on their interest rates.

According to Tanev, this measure is to bring an additional BGN 23 million to the government budget.

The representatives of the Socialist party and the Movement for Rights and Freedoms, the coalition partners supporting the Oresharski government, voted against the proposed increase.

Martin Dimitrov of the Reformist Bloc (RB) also opposed the restoration of the tax to 10 %, saying that the RB has always declared itself against tax increases.