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Finance Ministry expects loss of 1 percent of GDP in taxes

The Finance Ministry expects that state income in taxes will decrease by approximately 1 percent of GDP, or €700 million, due to the impacts of the economic crisis in Slovakia, according to the ministry's most recent prognosis. Independent analysts told the TASR newswire that the loss will be even greater when additional expected economic developments are taken into account. The ministry said that losses in taxes will be caused mainly by slower economic development. The state budget was designed with planned economic growth of 5 percent, while present estimates are for 2 percent growth. The prognosis may still be adjusted, most likely downward. Other factors that will lower yields from taxes include legislation connected to anti-crisis measures. The ministry in its tax income prognosis expects the Slovak economy to grow by 2.4 percent in 2009, while Poštová Banka analyst Eva Sarázová estimates only 0.3 percent growth. In this case, the loss in taxes would be higher by an extra €300 - €350 million.

The Finance Ministry expects that state income in taxes will decrease by approximately 1 percent of GDP, or €700 million, due to the impacts of the economic crisis in Slovakia, according to the ministry's most recent prognosis. Independent analysts told the TASR newswire that the loss will be even greater when additional expected economic developments are taken into account.

The ministry said that losses in taxes will be caused mainly by slower economic development. The state budget was designed with planned economic growth of 5 percent, while present estimates are for 2 percent growth. The prognosis may still be adjusted, most likely downward. Other factors that will lower yields from taxes include legislation connected to anti-crisis measures.

The ministry in its tax income prognosis expects the Slovak economy to grow by 2.4 percent in 2009, while Poštová Banka analyst Eva Sarázová estimates only 0.3 percent growth. In this case, the loss in taxes would be higher by an extra €300 - €350 million.

ING Bank analyst Eduard Hagara is even more pessimistic, saying that the discussion can now be held only in terms of how great the recession will be, with no growth to think about at all. He said that falling foreign demand and the situation in the domestic market show that GDP could fall by as much as 2 percent this year.

The government in its original prognosis from November last year estimated that state income from taxes would reach a level of €12.146 billion. The most recent estimate is now set at €11.428 billion. State income from taxes reached approximately €11.189 billion last year. TASR

Compiled by Zuzana Vilikovská from press reports
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