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Parliament Approves VAT Rate Increase to 20 percent
Tuesday 30 November 2010 Zoom in | Print page
Bratislava, November 30 (TASR) - The basic VAT rate will be temporarily increased from 19 percent to 20 percent as of January 1, while the 6-percent VAT rate on foods at yard sales will be abolished, the Parliament decided on Tuesday.
The VAT rate increase is part of Government's package aimed at a consolidation of the public finances, which should reach a deficit of 8 percent of GDP next year. This temporary measure will end after the deficit is squeezed below 3 percent, which is expected to happen in 2013.
The parliamentary Opposition strongly disagreed with the move, labelling it as non-systematic and claiming that it will be the public that will have to bear the consolidation burden. The strongest parliamentary party Smer-SD unsuccessfully attempted to replace the VAT increase with an extraordinary tax on banks.
Smer MP Peter Kazimir reminded that Parliamentary Chairman Richard Sulik (SaS) back in August declared that he won't push for a VAT increase. Kazimir further noted that the measure - that has been brought in nonetheless - will hike the monthly cost of an average family with two children by €10, which may result into a change of consumer behaviour and cross-border shopping tourism. "The parking lots [in front of shops] in nearby villages in Austria are full even now," said Kazimir.
Meanwhile, the Association of Employers' Unions (AZZZ) and farmer unions proposed increasing the VAT rate to 21 percent, but keep the excise tax on beer and agriculture diesel the same. Almost 200,000 people signed the petition on maintaining the consumer tax rate on beer.
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