Slovakia is set to miss its target for tax revenue more than previously projected, putting strains on the contry’s plan to cut the budget deficit below the European Union’s limit as early as this year.
Tax revenue this year will probably be 347 million euros ($452 million), or 0.5 percent of gross domestic product, lower than projected four months ago, the Finance Ministry said in a revised forecast e-mailed from Bratislava, Slovakia. In 2014, the shortfall will reach 0.8 percent of GDP and continue widening to 1.3 percent in 2016.
The change reflects the ministry’s June 11 revision of its economic-growth forecast, which was cut by 0.7 percentage point to 0.5 percent. The slowing economy will weigh on receipts from the value-added and income taxes as persistent unemployment hurts consumer spending and profit outlook for companies worsens, the ministry said.
Prime Minister Robert Fico wants to cut the budget deficit below the EU limit of 3 percent of GDP this year to differentiate the country from its ailing peers in the euro region, which Slovakia joined in 2009. The European Commission in its May forecast said the goal is achievable.
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