What Will Fico’s Social Democratic Government Bring?
Now that Robert Fico’s Smer-SD party has firmly established control over parliament with 83 of 150 mandates, nothing stands in the way of it pushing through just about any legislation it wants, with the support of just 7 additional MPs needed for any change to the Constitution. The party can now flex its social democratic muscles to the full, so what exactly is in store for the country?
In order to fill the hole in public finances while still being able to push through social policies, Fico looks set to take on a Robin Hood type role by taking from the rich and giving to the poor, and to the poor state, of course.
According to economic daily Hospodarske Noviny, PM in waiting Robert Fico plans to cancel the flat tax system and slap a 25% tax on anyone earning over EUR 33,000 a year (EUR 2,750/month), with a similar 22% tax for those companies lucky enough to have a EUR 30 million or more tax base. These moves would generate an additional EUR 130 million or so for the state coffers.
For professional employees like managers and IT experts, the wealth tax will mean around EUR 150 more a month in taxes. The plan has obviously rattled also employers associations, with Klub 500 forewarning that it could have disastrous consequences, and so it will try to convince Fico and his party to ditch the idea. Another association of employers RUZ warns that the move could deflect investors.
The new government will also probably hike up the special bank tax, adopted in October last year, putting it up from 0.4% to the level proposed originally by the Smer-SD party, i.e. 0.7%. Fico has also declared his readiness to readdress the changes made to the Labour Code by the fallen government of PM Iveta Radicova, and so its revision will probably be given priority, working more in favour of employees.
Fico’s stand-alone government will also freeze pending privatisation plans for Bratislava Airport, Cargo railway company, heating plants, public transport companies and even the state’s 49% stake in Slovak Telekom. As Fico was always a big supporter of building motorways through private companies in PPP projects, this form of financing, criticised by the former government as wasteful and open to cronyism, will probably be reintroduced. We can also expect to see progress made in the broad-gauge railway project, which will enable trouble free carriage of goods all the way from Russia, deepening relations with the east.