BRATISLAVA, April 5, (WEBNOVINY)- Following the negotiation marathon lasting several weeks on the shape of the prepared reform of taxes and payroll levies coalition parties have eventually struck an accord on the issue. Prime Minister Iveta Radicova reported after Monday’s meeting of coalition leaders that the agreed-upon reform will basically simplify tax and payroll payments. The Finance Ministry will subsequently submit the fine-tuned draft reform for interdepartmental review and the coalition will open a public discussion on the changes, said the prime minister.
Radicova specified that the tax and payroll levy burden would be moderately lower after the reform. Based on the agreement, minimum social and health insurance payments paid by 80 percent of the self-employed should go down from the current EUR 160 to less than EUR 140. The prime minister promised to disclose more details in the coming days, after comments from the Coalition Council are incorporated in the material.
The head of MOST-HID Bela Bugar informed that the coalition had agreed to scrap the deductible lump sum at 40 percent, which will be replaced by deductible expenditures equaling the subsistence minimum of almost EUR 190 on a monthly basis.
The coalition has also confirmed social insurance payments paid by businessmen at 13 percent of the super-gross wage and health insurance premiums at 9 percent. However changes in the rate were okayed also for contract agents for whom it was set at 10 percent in the case of social insurance payments while they will not pay payroll levies from their income if it does not exceed the subsistence minimum.
The part of the agreement the prime minister went on to say is gradual reduction of the payroll levy burden of employees by 4 percent. Payroll levies paid by employees should be cut by 1 percent on a yearly basis. The rate of social insurance payments by employees remains at the original 19 percent from the super-gross wage: the gross wage plus the employer’s expenses per employee. The coalition has also confirmed an agreement on one-off writeoffs of investment property for businessmen already in the first year.
After the changes are implemented, the reform will not be fiscally neutral as the Finance Ministry had originally planned. However shortfalls in revenues of public finances should be offset by dynamic effects of employment growth. It should improve not only due to the changed payroll levies but also as the result of the improved business environment, which is expected to be under the positive influence of the curbed red tape.
SITA