Miklos announces tax and levy shakeup

At a press conference today, 16 August, finance minister Ivan Miklos and labour minister Jozef Mihal announced their plans for a shakeup of the tax and payroll levy system. The main target of the changes was to abolish various unjustified exemptions and deformations and so generate more receipts for the state coffers.

Miklos projects that the changes could mean an extra EUR 440 million for the state budget next year, and if steps continue then it could mean EUR 560 million in 2012 and EUR 635 million in 2013. “We are proposing abolishing the tax-exempt elements of the tax base for special-purpose savings, life insurance and additional pension savings,” said Miklos. The only part to remain tax-exempt will be what he referred to as “active income”, i.e. income arising from work, and not that from capital gains.

He also plans to unify the flat-rate taxation system to the level of 30%. To date this was split into three categories of 25%, 40% and 60%. Other targets include constitutional officials, as they will now have their lump-sum allowances taxed, but he wants MPs themselves to propose how their incomes should be taxed, so they can set a good example.

The changes are far-reaching and the system of health and social insurance payments will be completely revised.

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