Several East European countries have been flirting with various forms of a “retailer tax”. A tax similar (but not equal) to VAT, or the sales tax. Its proclaimed aim is typically to “punish” international retail chains, which have been repeatedly blamed for problems of local farmers and local food and beverages industry.
The Slovak government’s intention is to lower the market power of large international retail chains. Unfortunately, the alleged problems are mostly made-up. Instead, the “retail chain tax” may end up raising the food prices and wrecking havoc in Slovak retail.
Mankind has made unbelievable progress in the last one hundred years. From horse carriages to moon landings, from typhus epidemics to molecular genetics, from conservative patriarchate to gay marriages. One thing does not change though – the suspicion, or even hate towards merchants.
Do not be fooled by the vast yellow fields of rapeseed in Slovakia. The agricultural sector is a zombie, living on subsidies instead of fresh brains. There are a few exceptions (like the successful tomato growers), but the overall numbers are harsh.
Paying the advanced tax in Slovakia is a bureaucratic burden, since an entrepreneur has to take care of the regular payments. But there is a bigger problem. An entrepreneur has to pay the advanced tax from her/his current income – but the payment size is set according to her/his last year’s tax.
The first 16 years of the post-1989 period in Slovakia can be described as an era of privatization. A majority of the state-owned economy was transformed into a market-oriented model, where state-owned enterprises (SOEs) remain the only key player in several sectors.
INESS has been one of the few opponents of the regulation. We included the abolition of the cash payment restrictions in our long-term competitiveness program Top20. Also, thanks to our advocacy, the (currently) biggest opposition party included a partial easing of the regulations (rising the EUR 5,000 limit to EUR 15,000) in its 2016 election program.
Chinese steel is a typical strawman for U.S. politicians. Employment in the U.S. steel industry fell dramatically indeed. There were around 780,000 employees in the sector in the late 1960s and the industry was producing 115 million tons of steel. Today, there are less than 100,000 employees.
Most economists and politicians agree that investment subsidies break market principles. However, many consider subsidies a necessary tool in the global competition for investors and as an economic growth booster. INESS analyzed the investment subsidies granted in Slovakia during the years 2002–2016.