BRATISLAVA, June 22, (WEBNOVINY) — Although the Slovak Chamber of Commerce and Industry understands the need for fiscal consolidation, it has objections to the fact that a vast majority of the government proposed measures are aimed at diverting resources away from the private sector. Chamber of Commerce President Peter Mihok said at Friday’s press briefing that the government announced steps will ultimately lead companies to optimize their revenues and expenditures, as well as to relocation of companies to offshore countries. „We are not thrilled that the public sector will be diverting resources away from the economy, which should have served for its development,“ said Mihok. Austerity can ultimately lead to economic decline, he believes. The Chamber of Commerce also fundamentally disagrees with the plan to introduce extra taxation of selected business sectors, which it considers to be nonstandard.
According to Mihok, the government’s consolidation measures will impact low and middle-income groups, although Prime Minister Robert Fico declares the opposite. „Though it will not be directly, through direct taxation, but ultimately, as costs of businesses increase, higher costs will be transferred into prices,“ said Mihok. Eventually, lower income groups will be affected much more significantly. „In the end, citizens will pay for everything, even through initially businesses will pay higher transfers, but it will have to show somewhere else,“ he said.
The Chamber of Commerce further criticized the government plan to raise the cap for calculation of paid social security and health insurance contributions from three to five times the average wage, since this raises costs for businesses. „This will have an impact especially on good companies, where salaries are higher, where perhaps highly-qualified work is done. Well, I don’t know if we want to constantly make just production workshops?,“ asked Mihok. He believes that when the companies count their expenses resulting from the consolidation package, there will be nothing else left for them than to ‘optimize’ their tax base and the treasury will not receive as much additional revenue as it now expects. Therefore, Mihok believes a more effective step would be a combination of increased value-added tax and personal income tax, which however, Prime Minister Fico refuses to discuss.