Slovak government raises VAT as budget deficit looms for 2024
- The Slovak government plans to raise the VAT on books from 10% to 23% to address a projected budget deficit of 6% of GDP for 2024.
- This proposal has faced criticism from publishers, political opposition, and students, who argue it unfairly targets middle-class and lower-income consumers.
- The government is reconsidering the tax increase due to public backlash, highlighting the tension between fiscal measures and cultural accessibility.
The Slovak government, led by Prime Minister Robert Fico, is facing a significant budget deficit projected at 6 percent of GDP for 2024. In an effort to address this financial challenge, the government has proposed raising the value-added tax (VAT) on books from 10 percent to 23 percent. This decision has sparked backlash from various stakeholders, including publishers, political opposition, and university students, who argue that it disproportionately affects middle-class consumers and those with lower incomes. The Slovak Publishers and Booksellers Association highlighted that many book buyers are not solely wealthy individuals, contradicting the Finance Minister's assertion. In response to the public outcry, Interior Minister Matúš Šutaj Eštok acknowledged the controversy surrounding the proposed tax increase and indicated that the government would reconsider the measure. The proposed VAT hike would position Slovakia among the countries with the highest VAT rates on books in the European Union, second only to Denmark. The government aims to reduce the budget deficit to 4.7 percent of GDP by implementing a broader consolidation package that includes 17 measures, primarily targeting entrepreneurs. The European Commission has criticized Slovakia and several other EU member states for excessive spending, emphasizing the need for compliance with the EU treaty requirement of maintaining a budget deficit below 3 percent of GDP. In light of these pressures, the government is exploring various revenue-raising strategies, including a proposed reduction of VAT on school textbooks from 10 percent to 5 percent. The situation reflects a broader trend of governmental challenges in balancing fiscal responsibility with the cultural and educational needs of the population. The proposed tax changes could lead to a decline in book sales and publishing, ultimately impacting the availability of literature and the promotion of reading in Slovakia.