Slovakia’s social package to go to parliament in June

The government package of social measures should be put to the parliament for debate as late as in June, the Coalition Council (leftist senior ruling Smer-SD, nationalist SNS and centre-right ethnic-Hungarian Most-Hid) agreed on Monday. Recall that originally the coalition wanted to submit the proposals for the May session of the parliament. Most-Hid chairperson Bela Bugar explained that the delay was aimed to fine-tune the measures in order to keep the burden on the state budget as low as possible.

Note that Most-Hid is pushing for a reduction in payroll levies and an increase in the tax-free base for employees and the self-employed — in assessing the party’s original proposal, the Fiscal Responsibility Council RRZ estimated that its measures are to cost the state budget EUR346m in 2020, EUR523m in 2021 and EUR543m in 2022. Recall also that SNS chief Andrej Danko, who’s promoting cuts in corporate taxes, stated in late-April that the reduction probably will not go across the board -he has admitted that as long as about 80% of companies have a turnover of less than EUR50,000 per year, a compromise could be firms with turnover of up to EUR100,000 per year and the self-employed to be subject to CIT of 15%, while the rest — of 21%. In addition, SNS wants to reduce the VAT rate to 10% from the default 20% for selected foods, and scrap public-service radio and TV license fees for pensioners. RRZ estimated that SNS’s original proposal would reduce tax revenues by around EUR1.35bn in 2020 whereas the loss of CIT revenues alone would amount to EUR800m. Smer-SD wants to see an increase in parental benefits (by EUR150 for those who held jobs prior to going on maternity leave and by EUR50 for those who did not) and the introduction of 10-day paternity leave for fathers after the birth of their child, along with 5 days off per year for accompanying a relative to see a doctor when their spouse is on maternity leave. Smer-SD also champions the introduction of state contributions to the purchase of school items for first-graders about to start elementary schools (of some EUR100), a motion that has already been submitted to the parliament. Another proposal already tabled by Smer-SD is the scrapping of fees for new documents when entering marriage.

PM Peter Pellegrini (Smer-SD deputy head) underlined after the meeting that healthy public finances remain a priority for the government. He said the measures of the social package are expected to be definitively passed in September. According to Pellegrini, the coalition allies are standing at a reasonable compromise with the resultant sum to remain easily manageable in the drafting of budget so as not to exceed the debt brake penalty limits of public debt and maintain well-balanced and healthy public finances. Thus, Pellegrini said he was confident that the agreement of the coalition partners about the basic parameters of the proposed social and fiscal measures would make it possible to maintain balanced public finances. However, the premier did not specify the precise financial impact on the state budget. Note that according to the approved Stability Program, the general government is to be balanced by 2022, which is nevertheless a step backwards as previously, along with the adoption of the budget plan for 2019, the government planned the general government to report a slight surpluses of 0.1% of GDP in 2020 and of 0.3% of GDP in 2021.

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