Slovakia: Flat Tax to be Abolished
This summer, the Slovakian government will resolve a package of 22 measures in order to fight public debt.
Slovakia´s new Prime Minister Robert Fico presented the austerity package this week. Next year, public expenses should be lowered by € 1.7bn. The government deficit should be kept below 3.0%. What is more, taxes should increase by € 1.0bn. Above all, entrepreneurs and employed persons and self-employed persons are affected.
Slovakia´s budget deficit amounted to 7.7% in 2010 and 4.8% in 2011. This year, the deficit is anticipated to come at 4.6%. The public debt level grew from 75.5% in 2010 to 76.7% in 2011. In 2013, the debt level should rise to 81.0%.
Most of all, the flax tax should be abolished. Until now, companies were subject to a tax rate of 19%. As a result, the attractiveness of the Slovakian business location is massively concerned of the austerity policies. For foreign investors, the relatively low tax rate was seen as strength of Slovakia. The tax quota for companies should increase to 23%. Besides that, the banking sector faces extraordinary taxes. Bank taxes should be even higher than in Hungary. Furthermore, the property tax will be doubled.
At the moment, Slovakia suffers from a high unemployment rate of 13.5%. In the last years, GDP growth reached 4.2% (2010) and 3.3% (2011). This year, an economic growth of 2.4% is forecasted.