Coalition irons out draft budget for 2011

Coalition shows its ability to compromise again

Following four hours of talks yesterday the four ruling coalition parties finally ironed out the last unresolved issues for next year’s budget. The final draft has higher expenditures than originally projected, but also higher receipts to the state coffers.

The government is hoping that its budget will pull down the public deficit by 2.5% next year, while trying to keep the impact on the lower income bracket of the population to a minimum. It wants to counterbalance the compromises it made in the budget by imposing extra taxes on the excessive emission allowances granted to certain companies under the former government of Robert Fico, for example.

Among other things, the four party leaders agreed on the levying of health insurance contributions from corporate dividends, which could cause some to look for ways of evading their tax obligations.

The controversial 49% hike in excise tax on beer was slashed to 22% and 27% for small and large breweries respectively, but the brewers still feel discriminated against because wine, for instance, is not subject to the excise tax.

Finance minister Ivan Miklos expressed his conviction that the budget changes will not mean a higher public finance deficit for 2011 than the projected 4.9% of the GDP (while this year it is around 7.8%). “The overall framework of the budget remains the same and the deficit of public finances should stay below 5 percent of GDP,” he said.

Parliament will start debating the budget for next year and budget outline for 2011-2013 at its session set for 30 November. Given the opposition’s rejection of almost everything that the current government is trying to do, discussions could become heated and take some time to complete.

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