Monitor: Kamenicky: Consolidation Without VAT Tax Hike Impossible

(STVR, 'O 5 minut 12', September 22) Speaking on STVR's discussion programme 'O 5 minut 12' (Five Minutes to Twelve) on Sunday, Finance Minister Ladislav Kamenicky (Smer-SD) claimed that the governing coalition tried to embrace measures with minimal impact on the common people in its consolidation effort, but due to the abysmal state of public finances, the consolidation without VAT hikes is impossible. "We tried to come up with measures that will truly bear less impact on the people and in essence make big firms show solidarity with small ones and the rich with the poor. And VAT was a topic, regarding which I had to tell Robert Fico (Smer-SD): sorry, but we can't do it without the VAT (hike) at the moment, due to the state of public finances. After all, €2.7 billion is an enormous sum," said Kamenicky. According to opposition's SaS Vice-chair Marian Viskupic, also on the show, the Government has prepared a "deadly cocktail" of measures for businesses and the people that will result in higher prices. "The impact on people will be extensive price hikes and the impact on businesses a steep increase in costs, all of which hinder the economy and restrict competitiveness," said Viskupic and warned that the Government has decided to foist the bulk of the consolidation costs onto the people and firms. In Viskupic's view, the Government should introduce austerity measures to itself, first and foremost, underlining that state employee costs are planned to balloon to €14.5 billion in next year. SaS would also save money on 13th pensions. "This year, pension-related expenditure has grown by 17 percent and that's at 2.3-percent economic growth, if it even happens. That's the Greek path, this is exactly what happened in Greece - the country was increasingly paying more and more in pensions that it simply couldn't afford," he said. In compensation of the passed consolidation measures, the state proposed to cut VAT tax on selected foodstuffs, medications and textbooks to 5 percent. According to Kamenicky, this will lead to cheaper foodstuffs. Such a view didn't sit well with Viskupic, who warned that lower VAT tax on foods won't make their prices drop. "It would have helped if it had been a single measure. If the Government hadn't been doing a cascade of other measures that will make business costs go up," he replied. "But this doesn't happen. All those additional costs you're saddling the businesses with - transportation costs, transaction tax and various special levies - those cannot and won't be offset by lower VAT." mf