KOSICE, September 30, (WEBNOVINY)- The leader of the strongest opposition party SMER-SD Robert Fico harshly slammed the government of Iveta Radicova at his news conference on Friday for its plan to curb funds for municipalities and countries. “An extremely crisis situation is emerging in local and regional self-governments. Mayors are turning to us to prevent the adoption of the measures prepared by the government which threaten to liquidate self-governments. Instead of saving its expenditures the state attempts to access new funds to the detriment of towns, villages and higher territorial units,” said Fico.
Fico reported that the rightist government at the helm of Slovakia plans to change the so-far tax redistribution system and has prepared a kind of a tax mix that does not only consist of the personal income tax but also contains revenues from tax paid by corporate entities, VAT and excise taxes as well.
Fico warned that due to new funding rules, self-governments will lose some EUR 250 million next year while the government plans to spend the money for its own state expenditures. Under the new model, towns and villages would get EUR 190 million less next year and counties‘ revenues from the state’s tax income would shrink EUR 60 million, Fico warns. According to self-governments if the current redistribution model is preserved, they would get 19 percent more next year.
Fico underscored that they are not here just to criticize but they are prepared to come up with solutions. At the next parliamentary session the party will submit a draft according to which people with annual income exceeding EUR 33,000 would pay 25-percent income tax. The party also develops efforts to increase the levy rate for banks and corporate entities with a higher profit, let’s say more than billion euros, specified Fico. He estimates that the measures might bring up about EUR 400-500 million. Fico underscored that they would not support the tax mix draft in parliament as it is aimed against self governments and might liquidate them. He slammed the government for having prepared the changes without discussing them in advance with representatives of municipalities and countries. He said that he meets over the issues with mayors later on Friday.
According to the Finance Ministry draft the Cabinet adopted earlier 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.
SITA