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FinMin: Tax hikes are unavoidable

SLOVAKIA will not be able to cut its budget deficit without an increase in some tax rates, Finance Minister Ivan Mikloš said at a meeting organised by the Trend economic weekly on February 14.“Those saying that we can manage without raising taxes don’t quite know what they’re talking about,” Mikloš stated, as quoted by the TASR newswire.

SLOVAKIA will not be able to cut its budget deficit without an increase in some tax rates, Finance Minister Ivan Mikloš said at a meeting organised by the Trend economic weekly on February 14.
“Those saying that we can manage without raising taxes don’t quite know what they’re talking about,” Mikloš stated, as quoted by the TASR newswire.

Mikloš sees increases in energy-related taxes, except the tax on motor fuels, and higher property taxes as the most acceptable, saying that Slovakia has low property taxes in comparison with the average for countries that are members of the Organisation for Economic Co-operation and Development (OECD). He believes the 19-percent flat income tax rate should not be changed.

“This [flat] tax made the tax system simpler,” Mikloš stated, adding that “abolition of the [flat] tax would be the first step towards introducing non-systemic elements”.

Mikloš also said that the public finances could be improved by more efficient and effective tax collection, most notably in VAT and excise taxes, as evasion of these two taxes is estimated to cost the state around €1.4 billion per year.

Tax increases or other changes to the current tax system may be a hot topic after the March 10 parliamentary elections. While parties on the right of the political spectrum are advocating an increase in VAT, which is currently at 20 percent, as well as higher excise taxes, parties on the left are considering raising taxes on those with higher incomes.

The largest opposition party, Smer, attempted to pass legislation providing a higher tax rate on higher-income individuals and large corporations in this parliament but failed to do so.

On February 9 the Slovak parliament rejected a Smer proposal that would have increased the income tax rate on certain individuals as well as corporations. The income tax rate for individuals with an annual income of more than €33,000 would have risen from 19 percent to 25 percent and was projected to affect about 25,000 individuals.

Smer also proposed to increase the income tax rate on about 31 corporations with taxable income exceeding €30 million from 19 percent to 22 percent.

Topic: Finances and Advisory


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