Saturday, December 29, 2012

Flat Tax Roundup December 2012

Two major events affected flat-tax countries in December 2012.

Slovakia

On December 4, 2013, the center-left parliament of Slovakia modified the country’s historic 19% flat-rate tax, which was introduced in 2004.  Effective January 1, 2013, the income tax rate for corporations was raised from 19% to 23%, while that on individuals earning more than €39,600 (€1=$1.30) a year was raised to 25%, thereby creating two brackets of 19% and 25%.  The top 25% rate will only apply to the top 1% of taxpayers.

To show that government officials would bear the burden of higher taxes, the prime minister, cabinet members, and all members of parliament would pay an additional 5% tax on their government salaries.

The government of Socialist Prime Minister Robert Fico, elected in March 2012 on the pledge to impose a higher tax rate on upper-income earners, claimed that the additional revenue to be raised, along with some spending cuts, was required to reduce the country’s estimated budget deficit of 4.6% below the eurozone’s target 3% ceiling.

Czech Republic

On November 7, 2012, the lower house (Chamber of Deputies) of the national parliament approved a proposal to impose a second higher rate of 22% on annual income exceeding Czech Koruna (CZK) 100,000 ($5,200) per month.  President Vaclav Klaus signed the bill on December 22, 2012, which will take effect on January 1, 2013.

As in Slovakia, the Czech Republic’s flat 15% tax rate was replaced with two rates, 15% up to CZK 100,000 per month, and 22% above that level.



12 comments:

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Thomas Spitters said...

Sir,

Yes, thank you for your posts and the related details, but these tax rates for Slovakia and Czeck Republic can with some study and related analysis be deemed socialistic and anti - business. A flat tax on the level mentioned in your post indicates confiscatory behavior on the part of the countries mentioned, and indicates as well that bad apples in the revenue collection in both countries have spoiled the public financial environment, at least from the standpoint of compliance and creating a "win / win" for taxpayers as far as revenue collection is concerned.

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