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Slovakia’s governing coalition reaches accord on income tax and payroll levies

Following negotiations lasting several weeks on the details of proposed changes in income taxes and payroll levies, the four parties of the governing coalition parties have reached accord, Prime Minister Iveta Radičová said after an April 4 meeting of coalition leaders, the SITA newswire reported.

Following negotiations lasting several weeks on the details of proposed changes in income taxes and payroll levies, the four parties of the governing coalition parties have reached accord, Prime Minister Iveta Radičová said after an April 4 meeting of coalition leaders, the SITA newswire reported.

The Finance Ministry will subsequently submit a fine-tuned draft document for interdepartmental review and the coalition will open a public discussion on the changes, the prime minister said. She stated the overall income tax and payroll levy burden will be moderately lower after the changes. Based on the parties’ agreement, the minimum social and health insurance payments paid by 80 percent of the self-employed should go down from the current €160 to less than €140.

Radičová promised to disclose more details in the coming days after comments from members of the four-party Coalition Council are included in the material. The chairman of Most-Híd party, Béla Bugár, said that the coalition had agreed to scrap the deductible lump-sum of 40 percent and it will be replaced by deductible expenditures equalling the subsistence minimum of about €190 per month.

The coalition also confirmed social insurance payments paid by businesses at 13 percent of the so-called super-gross wage and health-insurance premiums at 9 percent. However, changes in the rate were also okayed for contract employees for whom it was set at 10 percent for social-insurance payments and they will not be required to pay payroll levies from their income if it does not exceed the subsistence minimum.

Another part of the agreement is reportedly a gradual reduction of the payroll levy on employees by 4 percent. The rate of payroll levies, however, is proposed to initially remain at the current 19 percent of the super-gross wage.

If these changes are implemented, the new taxation system will not be fiscally neutral as the Finance Ministry had originally planned. However, shortfalls in public revenues should be offset by the dynamic effects of employment growth and by an improved business environment, SITA wrote, based on an expected reduction in government red tape.

The Civic Conservative Party (OKS), a faction within Most-Hid party, still does not agree with the coalition plan. "OKS still holds the position that the state administration and the municipalities first have to reduce excessive consumption and systematically improve cost-effectiveness in spending public finances”, the party said.

Source: SITA

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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