Cabinet to discuss 2007 budget today

THE CABINET of Prime Minister Robert Fico meets today to discuss next year’s state budget, but already there are signs it may not include some of the key promises that Fico’s socialist Smer party made before June elections to raise tax rates for wealthy individuals and corporations, or to split the unified VAT rate.

The state budget draft, a copy of which is available at www.vlada.gov.sk, proposes revenues of Sk310 billion and expenditures of Sk346 billion for a deficit of Sk36 billion, or about 3 percent of GDP, which would be in line with the Maastricht economic criteria that Slovakia must fulfill if it is to adopt the euro as planned on January 1, 2009.

“The first version of the budget indicates that the government stands by its intention to fulfill the Maastricht criteria in the budget and keep the deficit under 3 percent of GDP,” said Radovan Ďuran, an analyst with the Institute for Economic and Social Studies.

The draft budget, which is likely to go through many rounds of debate and revision before it is submitted to parliament by September 22, does not take into account the government’s proposed lower VAT rate or higher tax on select individuals and corporates, writes the Sme daily.

Analysts pointed out that this was likely less a sign that the cabinet was backing away from its intentions than a reflection of the fact that the laws needed for the tax changes have not yet been passed by parliament.

The cabinet is scheduled today to vote only on the amount of the budget deficit.

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