Bulgartabac Holding sent an open letter to the Parliament's budgetary commission, stating that the tobacco factories in Stara Zagora [ticker: SUN] and Plovdiv [ticker: PLOBT], southern Bulgaria, would be shut down due to the higher-than-expected excise duties as of January 2006. The production of the two factories is expected to become unnecessary, because the total market in the country is expected to shrink by 35%, states Bulgartabac, and the plants in Blagoevgrad and Sofia would be able to satisfy the decreased demand for tobacco products. According to the holding, its annual production will fall to 13,000 tonnes in 2006, down from around 20,000 tonnes in the previous years. The lower consumption will reduce the state budget annual revenue from VAT by BGN 27 million. Bulgartabac's letter came as a response to the Government's plans to introduce higher excise duties on spirits and tobacco products as of the beginning of 2006, instead of waiting until 2008, when it will have to comply with EU regulations.