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Mikloš: Changes in tax system will increase state budget deficit

THE GOVERNMENT’S agenda and the measures it is taking are fundamentally in conflict, said former finance minister and opposition SDKÚ party vice-chairman Ivan Mikloš on September 29 in response to the draft income tax amendments approved by the cabinet at its session on September 28.

According to Mikloš, the proposed changes in the tax system will increase the state budget deficit and threaten the government's goal of introducing the euro in Slovakia in 2009.

Mikloš also claimed that the information that the government released on September 28 was so confusing that various media were contradicting each other.
The amendment contains changes to the way individuals and companies will be taxed. For example, companies, which are currently allowed to donate 2 percent of their taxes to charities, civic organizations and similar entities will only be able to donate 0.5 percent in future. Individuals will still be able to donate 2 percent of their income taxes in the same way, but only if they pay more than Sk12,500 in tax per year.

The amendment also reduces the non-taxable income amount for people earning at least Sk45,000 (€1,205) per month.

The government also plans to lower VAT on medicine from 19 to 10 percent, and increase the state's health insurance contributions.

Altogether, the amendments could generate an additional Sk1 billion in state revenues, but will increase public expenditures by Sk8.8 billion, Mikloš claimed.

The tax amendments must be approved by parliament, where the ruling coalition has a comfortable majority with 85 MPs in the 150-seat house.

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