Government presented €2.7bn consolidation measures
PM Robert Fico published planned fiscal consolidation measures totaling €2.7bn. The basic VAT rate will rise from 20% to 23% from January, the preferential rate on basic foodstuffs, textbooks, and medicines will be 5% instead of 10%, and other foodstuffs and energy will be taxed at a new rate of 19%. Revenue is expected to rise by €1bn a year. A new financial transaction tax for companies of 0.35% on bank transfers and 0.7% on cash withdrawals is to apply from April 2025 (€610m). The special levy will increase for energy firms by €156m, for refineries by €36m, and for telecoms firms by €25m annually. Income tax for companies with gross profits above €5m will be increased from 21% to 22% (€163m). Companies with turnover up to €100,000 per year will pay an income tax of 10% (currently €60,000 and 15%); the state will lose €54m. Dividend tax will be reduced from 10% to 7%. The cap for paying levies will be increased from 7 to 11 times the average wage (€92m). The parental pension will be reduced from a maximum of €300 to €46 per year, saving the state €287m. The tax bonus for children will be reduced for parents with an income above €2,500 and will only apply to children up to 18 years of age, saving the state €170m. Doctors' salaries in outpatient clinics and hospitals will rise by only 3%, saving the state €259m. The price of highway vignettes for cars will be increased, e.g. from €60 to €90 for 1-year vignette (€45m). The toll for trucks will also rise (€100m). The state wants to save €124m in labor costs and lay off 5,000 people.
It is possible that parliament will make changes to the proposed measures. It has already approved a new tax on sweetened drinks and higher taxes on cigarettes.
Contrary to expectations, the measures do not include lower contributions to the second pension pillar or an increase in the bank levy.
Next year, the public finance deficit should fall to 4.5-4.7% of GDP from this year's 5.6% and to 3% in 2027.
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