The current system of levies – unjust, demanding in terms of paperwork and unsustainable in terms of the public finances and the quality of the business environment – will persist unless the latest proposal to overhaul it is approved, according to Finance Minister Ivan Mikloš (Slovak Democratic and Christian Union (SDKÚ)).
Mikloš's assessment, delivered at a press conference on Tuesday, March 15, comes on the heels of a heated debate about how to reform the system of payroll deductions and their equivalents for the self-employed. Changes to the Slovak system, among the costliest in Europe, has attracted heavy criticism from organisations grouping self-employed people, the parliamentary opposition, as well as some parties within the governing coalition – with all of them arguing that the proposed new set-up, if approved, would impose too heavy a burden on the self-employed.
According to Mikloš, however, there is no feasible alternative which could simplify the system significantly while not taking a toll on any particular group. The minister noted that 1.65 million employees and 67,500 self-employed will be better off if the proposed reform goes ahead. He conceded that another 228,000 self-employed people may indeed take a hit, but this would only constitute the removal of distortions within the system. In line with the overhaul currently proposed, a so-called super-gross salary would be introduced, from which one social insurance and one health-care contribution would be paid. The health-care levy would be uniform - 9 percent - for all groups. The social levy would be as follows: 19 percent for employees, 16 percent for the self-employed and 13 percent for those working on the basis of a so-called work performance agreement.
As regards talks on the issue within the coalition and the lukewarm reaction to the reform from by some coalition parties, Mikloš noted that time for reaching agreement is running out. "Based on our estimates, we need to adopt a definitive political stance by next week at the latest," he said.
The changes to Slovakia's system of taxes and contributions must reckon on the differences between employees and the self-employed, and they should aim to improve the country's business environment and create more jobs, the co-governing Christian Democratic Movement (KDH) said in a statement. Party vice-chairs Ján Hudacký and Július Brocka discussed the modifications under preparation and their impact on the business environment. The self-employed were reported as voicing their concern over what they deemed as the government's shortage of information on the issue, while indicating that they were ready for talks on specific issues.
Compiled by Zuzana Vilikovská from press reports
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16. Mar 2011 at 14:00