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No extra money to fill municipal coffers

REGIONAL governments and municipalities will not receive 100 percent of the income taxes paid by private individuals as they had hoped.

REGIONAL governments and municipalities will not receive 100 percent of the income taxes paid by private individuals as they had hoped.

On September 21, the Slovak parliament rejected a proposal by opposition MPs to increase the share of income taxes paid by private individuals going into budgets of regional governments and municipalities from its current 93.8 percent to 100 percent.

Local government officials had hoped to partially patch the holes in the budgets of towns, villages and regional governments that have grown much larger due to the economic downturn, the SITA newswire wrote.

Milan Hort, Jozef Mikuš and Lucia Žitňanská from the Slovak Democratic and Christian Union (SDKÚ) proposed to allocate 75 percent of the collected taxes for municipalities and the remaining 25 percent to regional governments. Currently, the breakdown is 70.3 percent for municipalities and 23.5 percent for regional governments, with the remaining 6.2 percent staying with the state.

“Regional governments and municipalities are losing almost €140 million this year,” the opposition deputies wrote in their proposal. “Next year this sum will be as high as €207 million. Such a significant drop in income significantly endangers services provided by them to citizens.”

The Finance Ministry has not completely rejected such a solution but it would prefer more focused aid. There are several solutions being discussed between the self-governments and the ministry. One of them is to select a group of the most-affected municipalities on the basis of some criteria and to extend help to them.

In its June prognosis, the Finance Ministry estimated that income taxes paid by private individuals would amount to €1.654 billion for 2009. Compared with 2008 this is a drop of over 9 percent. In the original budget for 2009, regional governments and municipalities were expecting to receive taxes exceeding €2 billion.

Topic: Finances and Advisory

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