Finance Ministry presents official tax change proposal

THE FINANCE Ministry yesterday presented its plan for changes to Slovakia’s tax system, and while the cabinet has yet to discuss the proposal, it appears to fall short of the radical tax reviews promised by Prime Minister Robert Fico’s Smer party before June elections.

The ministry draft includes a reduction in the VAT on medicines from 19 to 10 percent, which is expected to result in a budget shortfall of Sk2.7 billion.

On the revenue side, the ministry plans to eliminate the basic non-taxable amount for both employees and self-employed people with gross earnings of over Sk1 million a year, which should raise an extra Sk1 billion for the state budget.

Businesses will no longer be allowed to assign 2 percent of their tax dues to non-governmental organizations, who will lose the Sk700 million they raised in this manner in 2006 to the state budget. NGOs will also no longer be allowed to pay no taxes on their first Sk300,000 in revenues, which will bring the state another Sk200 million.

Self-employed craftsmen will have their non-taxable amount reduced from 60 to 40 percent of their gross revenues, while contributions to the voluntary third pillar of the pension system will no longer be allowed to be deducted from the tax base, saving the state another Sk2 billion, according to the Sme daily.

Analysts agreed the proposed changes would hit the middle class most of all, not the wealthiest citizens whom the Fico government claims should show greater “solidarity” with their poorer compatriots.

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