THE FINANCE Ministry is proposing to unify motor vehicle tax rates in 2015, a break from the current policy, whereby regional self-governments set rates, and an attempt to level the playing field for businesses.
“The collection of the tax for usage of motor vehicles by the state will secure equal rights for all business entities and simultaneously this will support usage of ecological vehicles,” said Radko Kuruc, advisor of the Finance Ministry, as cited by the Pravda daily.
Commercial transport firms welcome the proposed change, as they consider the the current rates too high. Under the proposal, the national tax rate would be comparable to that now in Banská Bystrica Region, which has the lowest rates in the country.

The funds would be channelled into the state budget. Regional governments would be compensated for the lost revenue by receiving an increased share of the portion of income taxes paid by private individuals. Bratislava Region, profiting from the road tax the most, disagrees with the proposal and considers it interference into the independence of regional governments. The ministry submitted the draft revision to the motor vehicle tax for inter-departmental review on July 9. If approved, drivers will pay new tax rates as of January 2015.

Under the current scheme, each selfgoverning region sets its own rate for the motor vehicle tax and decides on tax relief and decreases, while this tax is a form of income. As a consequence, the tax differs from region to region. This, according to business representatives, creates a relatively non-transparent situation and unequal conditions for doing business in individual self-governing regions. The ministry proposes in the draft legislation to unify the tax rates at the current lowest rate, which is in Banská Bystrica Region. The tax will continue to pertain only to motor vehicles used for business. The ministry also proposes to extend the circle of vehicles exempt from payment to public transport buses, ambulances and vehicles in agricultural production, the TASR newswire wrote.

Tax rates will vary depending on the age of the vehicle, while vehicles up to six years of age can save between 10 and 20 percent, the draft legislation reads. Cars nine years old will pay a tax elevated by 10 percent and 10+ year-old vehicles will have a 20-percent tax increase. Electric vehicles will be exempt from tax, while rates for hybrid cars will be reduced by 50 percent. The road tax for vehicles used in intermodal transport will be reduced too. The highest proposed tax rate for passenger cars is €218 per year, and €2,790 per year for trucks.

The latter is a tax rate for trucks with three axles and which weigh more than 40 tonnes. Currently, this rate is the highest in Bratislava Region, where it is €3,014.91. Bratislava Region does not even allow commercial haulers with more ecological vehicles to pay lower taxes, Pravda wrote. Other regions offer only minimal discounts for ecological vehicles, while Banská Bystrica Region is the only region offering more significant discounts, the Sme daily wrote.

“Businesspeople with newer car fleets will save on the change in the taxing of passenger and cargo vehicles,” Robert Kičina, director of the Business Alliance of Slovakia (PAS), told Pravda.

Business leaders praise the proposed changes while noting they would like to see even bigger discounts for ecological vehicles.

“Neighbouring countries have higher discounts; they have lower tax on motor vehicles,” Pavol Reich, the general secretary of ČESMAD, told the public broadcaster RTVS. “If we want businesses in Slovakia to be competitive with those abroad, these reductions should be bigger.”

He told Pravda, he wants a 48 percent discount for new vehicle, as opposed to the ministry’s 20 percent. Commercial transport firms will push for more robust reductions during the inter-departmental review.

“Carriers have modern, ecological vehicles, not older than three years,” Reich said, as cited by Pravda. “Of course, there is a group of those which do not renew their car fleet. But we want carriers endeavouring to make progress and not only to survive.”

The tax on motor vehicles is one of the issues which ČESMAD and the Slovak Union of Motor Carriers (UNAS) wanted to have addressed when negotiating the new toll scheme with the Transport Ministry. Earlier this year they called for reducing the tax to close to the EU average, pointing out that this rate in Slovakia is the second highest, after Ireland. According to ČESMAD, because of the high road tax, carriers from abroad have flooded Slovakia, making it difficult for Slovak carriers to compete. It warned that if the state does not address this issue, Slovak carriers may re-register their vehicles in countries with better conditions.

Impact on self-governing regions

The Finance Ministry estimates revenues from the road tax at €141.413 million for 2015. The ministry plans to increase the regional governments’ share of income taxes paid by private individuals, to compensate self-governing regions from the current 21.9 percent to 29.2 percent. This increase should bring them an additional €150.314 million.

Bratislava Region has the most to lose as it sees the biggest profits from the current road tax. While the highest number of motor vehicles are registered in this region, the higher portion of income tax would not compensate for the fallout. Finance Minister Peter Kažimír estimated the gap for Bratislava Region at about €2.5 million.

“The self administration should also have an independent income,” Bratislava Region Governor Pavol Frešo told the public broadcaster RTVS. “This is a principle which nobody has dared to violate; or no government so far. I consider this to be significant interference into the independence of self administrations.”