Slovak cabinet approves new levy on banks to cut budget deficit

Slovak cabinet approves new levy on banks to cut budget deficit
The supertax will mean a total tax rate on bank profits of 45% next year. / bne IntelliNews
By Albin Sybera December 5, 2023

Slovakia's new government has approved a new levy on banks as part of a set of measures aimed at consolidating public finances.

The 30% super tax on profits approved at the cabinet’s December 4 session should be effective as of January. It will amount to €336mn of state income, or about 0.3% of GDP.

Minister of Finance Ladislav Kamenicky (Smer party) told journalists that the 30% tax “would drop by 5% until the year 2027” and that “we set the overall effective tax rate [on banks] next year at 45%”.

The tax is part of 18 measures worth €1.96bn which the cabinet intends to pass as one legislative measure referred to as “Lex Konsolidacia” (Lex Consolidation) before the end of this year.

Kamenicky said the tax rate won’t threaten the banks’ stability and that the legislation will be tied to bank’s economic performance.

Banks and financial institutions registered with the National Bank of Slovakia (NBS) would pay the levy “only if banks will have positive economic performance”, Kamenicky added.

Other measures approved as part of the package include an increased tax on alcohol served at restaurants and a tax on tobacco. A minimal tax on legal entities will also be introduced, and expenses at ministries will be cut by 5%.       

The cabinet kept  pensioners' benefits but scrapped the Slovak Constitution Day of September 1 as a public holiday. September 1 is still a holiday, but not one observed by employers.

The Ministry of Finance projects a public deficit of 6.5% of GDP this year and 6% of GDP next year. 

Controversially, at its Monday session, the cabinet also approved lowering the contribution to the public broadcaster RTVS from 0.17% to 0.12% of GDP, which amounts to saving €54.8mn in the state budget next year.  

The new form of RTVS financing was approved only in June, and the public broadcaster will now have a smaller income than under the previous form based on a collection of concession fees, DennikN pointed out.

The June legislation stated that a budget contribution of “minimally €180mn a year (0.17% of GDP)” and “optimally up to €200mn  a year (0.19%)” is to be made to RTVS.  

“The prime minister will let the RTVS management starve” in an effort to control the public broadcaster, editor-in-chief of, Peter Bardy, wrote in his editorial comment.     

Prime Minister Robert Fico said the 2024 budget will be discussed at a cabinet session next week.

Fico did not take any questions and ended the press conference by wishing the media “all the best” in fulfilling their legal obligation “to inform the public on time, objectively and truthfully” in a clear hint at his continuing spat with the country's liberal media.