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THE PRESIDENT VOICES OPPOSITION TO DOMESTIC TAX RATE BY RETURNING YET ANOTHER BILL

Schuster vetoes VAT

SLOVAK President Rudolf Schuster gave a serious headache to Finance Minister Ivan Mikloš last week after he vetoed a strategic law regulating value-added tax (VAT) on exports and imports with European Union countries.
A parliamentary session will meet on April 6 to try to override the veto. To do so, the support of a majority of all deputies, at least 76, will be required.

SLOVAK President Rudolf Schuster gave a serious headache to Finance Minister Ivan Mikloš last week after he vetoed a strategic law regulating value-added tax (VAT) on exports and imports with European Union countries.

A parliamentary session will meet on April 6 to try to override the veto. To do so, the support of a majority of all deputies, at least 76, will be required.

Prime Minister Mikuláš Dzurinda and his ruling coalition lack a parliamentary majority, but they may still rely on the help of independent MPs.

Mikloš warned that the absence of legislation could exclude Slovakia from unified European trade.

"In the event that, by the date of its entry [May 1], Slovakia does not have the new law on VAT adopted, Slovakia will face the risk of having its EU membership cancelled," the ministry told The Slovak Spectator.

"Slovakia will be isolated within unified trade, as businessmen from other countries will not be able to apply regular rules for the taxation of the intra-community trade of goods and services to Slovakia, and unified rules valid in all the EU member countries will be broken," reads the ministry's stand.

The president argued that the unification of domestic VAT rates at 19 percent has worsened the living conditions of nearly two-thirds of citizens, and that the most affected are the economically vulnerable groups.

Schuster, who has been taking advantage of a social agenda to boost his chances for re-election in the April 3 presidential race, according to analysts, insisted that a lower VAT should apply to basic foodstuffs, drugs and medical aids, children's clothing, school items, energy, books, newspapers, magazines, and some types of construction work.

However, the finance minister argued that the vetoed law was not about the VAT rates but rather about regulating the mechanism of taxing goods and services, the news wire SITA wrote.

According to Mikloš, the unified tax rate is included in the programme statement that the Dzurinda cabinet has been following.

The finance minister rejected Schuster's claim that the 19-percent VAT rate would lead to an enormous price surge and added that the VAT climb presented only one fourth of January's 4.4 percent price hike.

Mária Machová, general director of Slovakia's central tax administration, told the financial daily Hospodárske noviny that the president had made everything that is linked to the regulation of goods and services within the EU uncertain for Slovakia.

According to Machová, the missing legislation will keep tax authorities from being able to distribute the necessary information to those who will trade with the EU countries after May 1.

However, Schuster rejected Mikloš's accusation that his veto of the VAT legislation, approved in March, threatens Slovakia's EU entry. Presidential spokesman Ján Füle said the minister should have presented the revision to parliament earlier, in order to provide enough time for the president to examine the law and for parliament to reconsider it after a potential veto.

President Schuster has often been criticised for vetoing legislation.

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