THE GOVERNMENT in Slovakia is not considering changing tax rates for the moment although the public spending deficit has risen sharply due to the impact of the economic crisis, Slovak Finance Minister Ján Počiatek has told the Financial Times.
Počiatek said that Slovakia, one of central Europe’s flat-tax pioneers, with a general rate of 19 per cent, has one of the EU’s lowest levels of tax as a proportion of gross domestic product (GDP).
“This fact will have to be considered in the future,” he said in an interview with the London daily.
For the moment, the government is not considering changing tax rates, although taxes on gambling and alcohol might be raised, he said. There is also talk that the government may raise the ceiling on social insurance contributions to take a larger share from wealthier Slovaks.
The budget troubles stem from the Slovak economy’s unexpectedly steep deterioration. The finance ministry expects the economy to contract by 6.2 per cent this year, and grow by only 0.5 per cent in 2010 as the country is pummelled by the decline in Germany, the biggest market for the electronics and cars that make up the bulk of Slovakia’s exports.
“We are almost solely dependent on foreign demand. If Germany has difficulties then we will have difficulties,” said Počiatek. Slovakia is one of the EU’s most open economies, with exports amounting to about 85 per cent of GDP, according to the Financial Times.