KOSICE, October 4, (WEBNOVINY) — The Slovak Association of Towns and Villages (ZMOS) is principally and unanimously opposed to the Finance Ministry’s plan to finance self-governments with a so-called tax mix instead of the current model of a share from personal income tax revenue. The Cabinet has already okayed the new financing plan. ZMOS Chairman Jozef Dvonc said that the issue was the key point on the agenda of Tuesday’s ZMOS Council in the presence of mayors. The council was also dealing with an extraordinary congress that is to take place later this month.
“Financing was agreed during fiscal decentralization back in 2006 and now the government is changing it without a previous agreement, Dvonc complained. He said that various opinions are heard from regions including also radical ones. Dvonc stressed that they would be happy if the government does not turn a deaf ear to their arguments and is able to agree with towns and villages instead in order that they were able to perform their duties. Dvonc added that some members of regional associations are calling for protest rallies though the issue has not been yet officially discussed.
ZMOS clustering some 96 percent of municipalities across Slovakia wants to preserve the current funding model that is fairly distributing revenue from personal income tax among towns, villages and counties. ZMOS considers it unfair when the state resolves its problems by shifting the burden on citizens of towns and villages.
Dvonc said that the Cabinet insists on the new model while the respective bill is already heading to parliament. ZMOS will do its utmost to speak about the issue with lawmakers in Bratislava, heads of deputy clubs and have the bill changed based on these negotiations. The ZMOS extraordinary congress will have this issue on its agenda as well. Mayor of Spisska Bela Stefan Bielak said that if the Cabinet-approved version goes through, it would mean a shortfall of 50 euros per citizen for each single village and town. Kosice Mayor Richard Rasi said that the shortfall would liquidate the city that would not be able to fill such gap with a hike in local taxes and fees.
Finance Minister Ivan Miklos has reacted with an open letter to objections of representatives of self-governments to his changes to the model of funding self-governments with a share of centrally collected taxes. “If we do not want Slovakia to take the Greek path, all sections of public finances have to save in these hard times, both the central government and local self-governments,“ he wrote to ZMOS. Miklos turns down ZMOS arguments writing that new parameters are set in the way securing for self-governments revenues from the central tax, which will give them three percent more than what they get this year. “The basic point of the proposal is that while currently self-governments get 93.8 percent of the collected personal income tax, as of next year they will get 12.97 percent of the state’s revenue from all taxes, the so-called tax mix. The formula for calculation of tax revenue is changing but nothing has changed with the substance of the system of fiscal decentralization,” the minister wrote. Also after the prepared change is implemented, a financial package will arrive in accounts of individual towns, villages and counties by around the 18th day of each month that self-governments will be able to use based on the same rules as those applying now. Miklos understands that self-governments want more money. However, amidst big uncertainty as the consequence of the global economic development the minister considers the 3-percent y/y growth sufficient.
SITA