Bulgaria raising cigarette tax to curb smoking

File photograph of a Bulgarian man smokes cigarette in a cafe in central Sofia, January 16, 2005.

SOFIA (Reuters Life!) - Bulgaria's new government will raise excise duties on cigarettes 43 percent next year in a bid to curb smoking and relieve the health care system, the finance ministry said on Thursday.

The Balkan country, which is home to 7.6 million people, has the second highest percentage of smokers in Europe and has decided to ban smoking in all public spaces from June next year.

Bulgaria ranks second after Greece in the EU in terms of number of regular smokers as a percentage of the population, according to a Eurobarometer survey. More than half of men and more than a third of women smoke.

Finance Minister Simeon Djankov said the excise duties on cigarettes will jump to 76 euros ($110.7) per 1,000 pieces as of January 1 from 53 euros at present, which will increase budget revenues by about 226 million levs ($168.4 million).

The move will be part of the 2010 budget which the new government of the center-right GERB party, that won July general elections, will discuss next week.

The EU's poorest nation, hit by a deep recession, has cut spending by 15 percent this year and taken steps to curb smuggling and tax evasion to avoid a budget deficit this year.

But Djankov said the cigarette tax hike was not aimed at boosting revenues.

"This is mainly a health measure. Bulgaria needs to abruptly cut smoking," he told reporters in a conference call from Sweden where he is attending an EU meeting.

He said Bulgaria ranked first in the EU last year in the number of deaths from cardiac diseases, linked to smoking.

Opponents to the move have said the planned increase will boost cigarette smuggling and may lead to the bankruptcy of the dominant state cigarette maker Bulgartabak.

But Djankov said reforms at the revenue agency and the customs would help to crack down on smuggling and that his key concern was public health rather than corporate interests.

(Reporting by Tsvetelia Ilieva, editing by Paul Casciato)