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Shopping tourism causes €18.7 million shortfall in 1Q09 VAT revenues

A shortfall in VAT revenues due to 'shopping tourism’ – in which some Slovaks started shopping in neighbouring countries following the devaluation of the currencies of nearby countries – may have reached €18.7 million in the first quarter of 2009, the Finance Ministry said on Thursday, July 2, as reported by TASR.

A shortfall in VAT revenues due to 'shopping tourism’ – in which some Slovaks started shopping in neighbouring countries following the devaluation of the currencies of nearby countries – may have reached €18.7 million in the first quarter of 2009, the Finance Ministry said on Thursday, July 2, as reported by TASR.

The negative effect on VAT revenues due to 'shopping tourism' will continue to accumulate throughout this year and could reach €56.2 million by the end of the year, according to the ministry.

“The deceleration in final consumption of households from 5.6 percent to 0.5 percent saw the largest percentage fall in terms of VAT (incomes)” says the Finance Ministry's analysis.

Terno supermarket analyst Ľubomír Drahovský told TASR that the shortfall in VAT revenues isn't as large as it appears from today's perspective. “The year-on-year fall in VAT revenues could be only at around 10 percent,” he said.

Drahovský also pointed to the increased unemployment rate as a factor that may have caused households to behave more frugally. He suggested that the state should respond to this by aiding tradespersons or the self-employed sector.

Compiled by Zuzana Vilikovská from press reports
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