Bulgaria's new tax on luxury goods, which the government plans to introduce to help fight the economic crisis and keep down the fiscal deficit, will not benefit the municipalities, mayors have warned.

“The introduction of levies for luxury properties and cars will enrich only the budgets of the bigger municipalities such as Sofia, Varna and Burgas,” representatives of the Association of the Bulgarian towns and regions alarmed.

According to them owners of luxury property are likely to try to evade the taxation by transferring what they have onto companies.

The new tax, announced in March after an extraordinary cabinet meeting called to discuss anti-crisis measures, would affect the owners of yachts, aeroplanes, big cars and expensive properties as well as those with bank deposits of more than 50,000 euros.

It is part of a package of new measures, which also include floating minority stakes in state-owned companies and a possible bond issue.

The centre-right government focused its austerity measures on the wealthy, after its plans to raise the healthcare tax and cut benefits to civil servants triggered protests.