Slovakia’s government approved higher income-tax rates, abolishing the current flat-rate regime, as the east euro-region member seeks to boost revenue to cut its budget deficit.
If approved by parliament, the corporate income-tax rate will rise 4 percentage points to 23 percent, effective next year. The Cabinet in capital Bratislava also decided to impose a top rate for the highest earning individuals of 25 percent, compared with the current flat 19 percent rate, according to the government’s website.
The administration of Robert Fico is striving to cut the budget deficit below the European Union’s limit of 3 percent of gross domestic product next year to prevent contagion from the euro-area’s debt crisis. By focusing on wealthy individuals and companies, Fico seeks to meet his election pledge to minimize the impact of fiscal measures on the poorest citizens at a time when the economy is slowing.
The government, in power since April, has already adopted revenue-boosting measures worth 1.5 billion euros ($1.9 billion) by 2013. The tax increase, combined with some other planned moves, shall raise an additional 500 million euros next year, according to the Finance Ministry.
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