Smoke and mirrors as Mikloš robs from the poor to give to the rich

A BIG round of applause should go to Finance Minister Ivan Mikloš for a masterful display outmanoeuvring the press and the public with the new tax reforms.
Mikloš has followed the time-honoured formula of making an outrageous suggestion and then stepping back to a slightly less (but still) outrageous suggestion, and telling everyone that he has done them a favour.
He's managed it on an enormous scale with the new tax reforms.

A BIG round of applause should go to Finance Minister Ivan Mikloš for a masterful display outmanoeuvring the press and the public with the new tax reforms.

Mikloš has followed the time-honoured formula of making an outrageous suggestion and then stepping back to a slightly less (but still) outrageous suggestion, and telling everyone that he has done them a favour.

He's managed it on an enormous scale with the new tax reforms.

The press and general public have been so busy discussing whether the new flat tax rate should be 16 percent, or 17 percent, or 20 percent that all discussion of whether the flat tax rate is a good idea has been lost in the din.

Instead, the public is celebrating the cabinet decision to set the flat tax at 19 percent instead of 20 percent (and it may be reduced further still during parliamentary debate). The same flat rate applies to VAT.

There is no talk of the anti-progressive nature of either of these measures - both of which will tax the poor more heavily than the rich, since the poor will end up paying a disproportionate amount of their income in taxes.

In addition, the reform proposes to abolish inheritance tax - another measure that saves the rich money.

But the government will still need to find the revenue to fulfil its budgetary commitments, with schools and the health system - as well as almost all other public institutions - desperately under-funded and crying out for investment. Where will the money come from?

The poor, of course: increased taxes on beer and cigarettes.

Mikloš managed to pull another stunt with the ridiculous proposal that excise duty on beer should be increased for the second time this year, taking duty above the levels of all the neighbouring countries, almost three times higher than those of the Czech Republic and Germany, also beer-drinking nations.

The rise was perfectly timed to hit beer-drinking weather, and came under the shadow of an existing threat of a general strike. Is he crazy? No, just very, very sneaky.

A week after the original proposal, he announced that there would be a "lower rise in excise duty on beer to compensate for the higher taxes on petrol and diesel".

Everyone is happy: Instead of a more than tenfold rise in beer taxes since last year, there will only be a fivefold rise, and that is presented as a favour.

And yet the level will still be higher than in the Czech Republic and Germany. Once again, Mikloš has performed a sleight of hand to make everyone accept the unacceptable.

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