BRATISLAVA, April 27, (WEBNOVINY) — The major part of consolidation of general government finances in Slovakia will take place on the revenue side of the budget. This is confirmed by the draft National Program of Reforms, which is the agenda of the Cabinet meeting on Friday. Following its approval in the Cabinet, this material will go to Brussels as presentation of government’s plans in structural policies. „The current level of public revenue and impossibility to make major structural changes on the expenditure side in the short term indicate the need for increasing public revenue,“ says the draft.
Emphasis should be placed on taxes that will least reduce disposable income of low-income citizens, economic activity, or that are relatively low compared to other countries. „Progressiveness of the tax system will increase. We will consider raising revenue from property taxes and in this regard take into account factors such as luxury or ecological harmfulness. The government will take steps toward improving tax collection, for example, by preventing tax evasion and improving collection of VAT,“ says the reforms program.
The Cabinet sees a possibility to increase excise taxes, where it can still find space in taxing alcohol more. In addition, it will take steps to remove distortions of the tax-levies system in order to increase public revenue and will review the current setting of the bank levy. „Also on the revenue side, revenue will grow by tax increases on gambling and more efficient management of state enterprises to increase dividends paid to the state budget. Tax rates will be raised only to the necessary extent so that consolidation as much as possible supported economic growth,“ says the draft.
On the expenditure side of the budget, according to the program of reforms, the government can limit payments of certain benefits and contributions for families earning above average income. Steps will be taken to ensure financial and social sustainability of the pension system as a whole, which is its all three pillars. The government expects additional savings to follow its audit and reform of the state and local administration, for example by centralizing public procurement or establishing a national real estate agency.
In the draft program of reforms, the Cabinet undertakes to reform the pension system, which it considers unsustainable in the long run and therefore needs changes of its parameters. „In order to stabilize the financial flows in the longer term, the government will introduce a link between demography and parameters of the pension system, while gradually increasing the degree of solidarity in the pension system,“ says the document.
The Cabinet session Friday also has another document on its agenda, which will go to Brussels. It is the stability program for the years 2012 to 2015, which reaffirms the commitment of Slovakia reduce the government deficit below 3 percent of GDP by 2013. A prerequisite to meet this objective is this year’s observance of the budgeted deficit of 4.6 percent of GDP. For the coming years, a further reduction of the deficit is planned by about 0.5 percent of GDP annually.
SITA
