Bulgaria raises health tax as doctors protest !

Bulgaria raises health tax as doctors protest !

Wed Mar 10, 2010 10:03am EST

* Cabinet raises healthcare tax, deputies freeze salaries

* Doctors on strike over delayed payments

SOFIA, March 10 (Reuters) - Bulgaria's government approved a tax hike on Wednesday which it says will raise 300 million levs ($208 million) to support the ailing health system, as doctors staged walkouts for a third day.

The centre-right cabinet approved a 2 percentage-point rise in health insurance levies to 10 percent of an individual's income, effective from April, pending parliamentary approval.

General practitioners in all major cities of the European Union country said they would go back to work on Thursday after the government paid outstanding salaries, delayed since January.

"The increase is a hard and unpopular step. But it is the only possible option in times of crisis," Finance Minister Simeon Djankov told reporters.

The cabinet, which took office last July, aims to launch an ambitious healthcare overhaul but was forced to delay a planned closure of inefficient hospitals after growing public resistance. [ID:nLDE61E1G8]

In a separate development, parliament decided unanimously on Wednesday to freeze lawmakers' salaries. The move came after public and media criticism when deputies had initially decided to give themselves a small increase.

The government is expected to freeze all public sector wages next week.

The government says it can only raise spending if it manages to collect more revenues to avoid a large budget deficit that could put pressure on the lev currency peg to the euro.

Sofia has targeted a budget deficit of 0.7 percent of GDP for 2010, the lowest in the EU, but the prolonged recession is likely to increase it to 1.8 percent, officials say. (Reporting by Tsvetelia Tsolova, editing by Simon Falush)

http://www.reuters.com / Bulgaria Today