INESS: Additional Taxation Hidden in Levies Paid by High-income Employees

Bratislava, August 1 (TASR) - The tax changes that the government is about to introduce will be disadvantageous for employees with higher incomes, the Economic and Social Studies Institute (INESS) has warned in its latest publication, adding that higher-earning people are already subject to higher taxation hidden within the levies that they pay. "A progressive levy tax means social levies from which the taxpayer is not entitled to a social-insurance benefit. A progressive levy tax is paid by some 500,000 employees with monthly salaries of over €1,788," stated INESS, adding that the state currently collects €900 million via this tax. High taxation through the levy system is caused by a high ceiling for the payment of levies into social funds, equalling seven-times the average salary. INESS analyst Radovan Durana explained that an employee with a monthly salary of €3,000 pays progressive levy tax amounting to €130. People with a salary of €7,500 per month pay ten-times more this way, namely €1,397, which is the same amount as they pay in income tax. The publication states that a progressive levy tax puts people with above-standard earnings at a disadvantage. This means that the Slovak labour market is disadvantageous for employing doctors, specialists or top managers. With the same gross salary of €7,500, a qualified worker in the Czech Republic earns €352 per month more, and the employer pays €295 less for him, stated Durana. "Any introduction of new personal income tax rates will further deepen the disadvantage of the Slovak labour market and strengthen the motivation among talented and qualified workers to go to work abroad. This ultimately reduces the growth potential of the Slovak economy. The Slovak government should instead, therefore, consider reducing these rates, or reducing the progressive levy tax," said Durana. ko/df