BRATISLAVA, October 24, (WEBNOVINY) — The Association of Towns and Villages of Slovakia (ZMOS) considers changing the system of financing county and municipal self-governments unacceptable at this time. At the same time, ZMOS representatives claim they are willing to participate on consolidating public finances. According to the association’s chairman Jozef Dvonc, one of the two possibilities to accommodate these requirements is to maintain the current system of distributing resources to municipalities and at the same time reducing the share municipalities receive from personal income tax.
We fear that with introducing the tax mix, in the long-term towns and villages will get fewer funds, informed Dvonc on their position. As the MPs shifted the bill on budget allocation of some tax revenue to the second reading, ZMOS will demand halting the bill in parliament. “The only possibility to halt it is in the second reading,” said Dvonc after this Monday’s unscheduled ZMOS congress. Through various measures worth some EUR 120 million, the association is prepared to participate at consolidating public finances. The MPs shifted Cabinet draft on allocation of tax revenue to county and municipal administration, based on which municipalities should from 2012 be financed by a share of revenue from a mix of all centrally collected taxes to the second reading last week. SMER-SD and SNS opposed the draft, yet in the discussion SMER was mostly represented by MPs who are at the same time also mayors or county chairmen.
According to ZMOS Executive Chairman Jozef Turcany, towns and villages do not oppose being subject to the constitutional law on budget responsibility. They, however, demand that the law also mentions the competencies of municipalities and their financing. In such case, they would support the bill. Turcany even thinks such law could have a positive outcome for towns and villages.
According to the Finance Ministry draft the Cabinet adopted in September, the state budget should transfer to municipalities a share of revenue from a mix of taxes, including the personal income tax, excise taxes and VAT. Currently, they are financed only by a share of revenue from personal income tax. As a result of this change in 2012, municipalities would receive less than they would according to the current formula, but still more than they received this year. The ministry determined the share of tax revenue so that municipalities would get three percent more funds in 2012 than they had in 2011. However, according to the old system, their income would improve by over 18 percent.
SITA