BRATISLAVA, October 4, (WEBNOVINY) — The draft budget for next year will be submitted for Wednesday’s Cabinet session without the support of social partners. As was expected, trade unionists oppose the draft bill on the state budget. Employers voiced some objections, too, but they accepted the draft as a whole. “Entrepreneurs do not welcome some measures. In general, however, we accept the draft budget, as it fulfills the thesis that cost cutting is inevitable if we want to be better in the future,” said head of the National Association of Employers Marian Jusko after the tripartite meeting of social partners.
Employers would welcome a higher increase in the value-added tax instead of increasing some excise tax rates. Jusko added that it can logically be expected that reduction of spending by the government will reduce the country’s economic growth, too. Slovak firms consider as yet a bigger problem the reduction of government spending at our biggest trade partners. “This is a much bigger problem than the package that affects only the small local market”.
In compliance with their earlier rhetoric, representatives of unions did not support the draft budget for next year at Monday’s talks with their social partners. The main reason for it is the austerity package whose better portion is on the side of government revenues. They claims that the increase in VAT and excise taxes will raise inflation and prices, which are reasons why they cannot support the draft. They would prefer more cuts on the side of expenditures, announced head of the Trade Unions Confederation (KOZ) Vladimir Mojs. Unionists suggested including foodstuffs and child clothing among goods with a reduced VAT rate, or introducing progressive income taxation so that people with higher income pay higher income tax. According to the present draft, the VAT is to increase temporarily from 19 to 20 percent, while excise tax on some goods is to go up, too, and tax exemption and some others are to be eliminated, among the government’s measures.
The Cabinet of Iveta Radicova presented its first state budget bill last Thursday. According to the draft, the deficit for next year is projected at EUR 3.823 billion. Revenues are budgeted at EUR 13.092 billion on expenditures of EUR 16.916 billion. Self-governments should get EUR 1.046 billion from state coffers next year; thereof EUR 649.7 million will go to municipalities and EUR 395.8 million to counties. State budget reserve is set at EUR 23.8 million, according to the state budget draft.
The previous government of Robert Fico projected budget revenues for this year at EUR 12.531 billion on expenditures of EUR 16.277 billion. The planned deficit was EUR 3.746 billion. However, given the real development, these plans will not be met and the state budget deficit will reach EUR 4.7 billion, according to the Finance Ministry. The ministry expects 2010 budget revenues at EUR 11.147 billion and expenditures at EUR 15.847 billion. General government deficit is to improve only mildly, from last year’s 7.9 percent of GDP to 7.8 percent.
SITA