SOFIA, Sept 5 (Reuters) - Bulgaria's Socialists, whose government resigned in July after one year in office, pledged on Friday to abolish the flat income tax rate and boost controls over the banking system if they win an election in October.
The Socialists trail the centre-right GERB party ahead of the October 5 vote, recent opinion polls showed, and their term was overshadowed by anti-corruption protests, deadly floods and a banking crisis.
Centre-right GERB, set to win the October poll, is unlikely to obtain an outright majority, which may leave it struggling to form a working government, political analysts say.
The Socialists pledged legal changes to increase the responsibility of shareholders of commercial banks and to carry out a review of the central bank's activities in the wake of the worst banking crisis to hit the Balkan country since the 1990s.
In June, a bank run on deposits prompted the central bank to seize control over Corporate Commercial Bank (Coprbank), the fourth-largest lender, and shut down its operations, leaving depositors with no access to their funds.
The crisis has raised concerns over the quality of the central bank's supervision over the banking system. Political leaders have called for the resignation of Governor Ivan Iskrov - an issue that is likely to come up again once a new parliament is formed after the vote.
News in June that the central bank deputy governor in charge of banking supervision was being investigated for abuse of office also stoked depositors' panic.
"We insist on a thorough review of the Bulgarian National Bank, which needs to carry out its role to maintain the stability of the banking system adequately and responsibly," said a manifesto document, published on the party's website.
The Socialists had supported the abolition of the flat income tax of 10 percent - among the lowest in the European Union - and introduce graded system before they took office in May of 2013, but later dropped the idea.
The GERB party supports the flat tax, but is considering allowing municipalities to increase it by up to 2 percentage points and keep the proceeds.
The Socialists also pledged to push ahead with major Russian-led projects like the South Stream gas pipeline and restart the blocked project to build a new nuclear power plant at Belene, for which Russia's Atomstroiexport was contracted.
The party, whose supporters are in favour of closer ties with Russia, said it did not back the expansion of economic sanctions over Moscow as a means to solve the Ukraine conflict.
On Friday, German Chancellor Angela Merkel said that Brussels was set to agree on new economic sanctions against Russia but could suspend them if Moscow withdraws its troops from Ukraine and observes a ceasefire. (Reporting By Tsvetelia Tsolova, Editing by Matthias Williams and Angus MacSwan)
Our Standards: The Thomson Reuters Trust Principles.
