Controversial special levy on retail chains scrapped

The Slovak National Party has stopped the levy it introduced few months ago.

Illustrative stock photoIllustrative stock photo(Source: SITA)

Retail chains in Slovakia will not have to pay a special levy to the state. After the European Commission suspended the special levy in early April, parliament has decided to cancel the measure altogether.

The draft amendment to cancel the levy, authored by the Slovak National Party (SNS) which also introduced the new tax, was discussed in a fast-track proceeding and approved by all 141 MPs present.

Criticism from the opposition

The SNS introduced the original law last September, without submitting the proposal for interdepartmental review and discussion with experts. Even though parliament adopted several amending proposals during the discussion, which meant that the levy was not applied to all retail chains, some retailers challenged it in Brussels, the Denník N daily reported.

During the discussion about the amendment, in which the SNS proposed to cancel the levy, opposition MP Ondrej Dostál, who is a member of the Freedom and Solidarity (SaS) caucus, asked the party why it did not stand its ground. He recalled that during the discussions of the levy, the party claimed that it was all right, as reported by Denník N.

Increase in prices?

On April 2, the EC issued an injunction requiring Slovakia to suspend the application of the special levy on retailers, which came into force in January 2019. The first payment would have been due by the end of April 2019.

It also opened an in-depth investigation into this tax on the food retail sector in Slovakia due to the concerns that certain exemptions from the tax gave some retailers a selective advantage over their competitors, in breach of EU State aid rules.

Speaker of Parliament and SNS chair Andrej Danko responded that it would be easy to correct the law but he decided to withdraw it instead.

As a result, retail chains will not be obliged to pay the levy. The SNS anticipated that it could collect some €70-€80 million per year.

Read also:Extreme rise in food prices: Who and what to blame for it?

However, food prices experienced their highest increase in 15 years, analysts claimed, with one of the contributing factors being the special levy. The Institute for Financial Policy, running under the Finance Ministry, claimed that about 0.9 percent of the 3 percent increase was caused by the levy. The Finance Ministry however maintained that the influence of the levy was smaller, about 0.1 percent out of a 2.2 percent increase.

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