Slovakia pushes to keep tax breaks for big investors in competition talks

Date: 18/07/02

By David Cronin

SLOVAKIA is lobbying hard to retain tax breaks offered to major foreign investors in talks on aligning its legislation with EU competition rules.

Bratislava fears that if those regulations are too strictly applied special arrangements made with Volkswagen and US Steel would be jeopardised.

Tax exemptions to the two companies granted in the late 1990s are estimated to be worth €22 million in annual state aid.

Deputy Prime Minister Ivan Miklos, who is in charge of economic affairs, is asking EU anti-trust officials to regard the deals with the firms as 'extraordinary cases'.

Both are major employers in a country with high unemployment, as well as being its top two exporters.

Speaking to European Voice, Miklos said he wanted EU competition chief Mario Monti, with whom he held talks last week, to appreciate the political and social importance of these investments, as well as the technical details.

'I hope the Commission will see both of these aspects,' he added. The 'tax holidays' issue is proving to be Slovakia's major obstacle in closing the competition chapter in negotiations on its EU membership bid.

Yet Miklos expressed optimism that it would be able to sort out the remaining problems in the next few months, particularly the question of how long the exemptions may be continued.

Miklos, a key member of premier Mikulas Dzurinda's Christian Democrat party, played down fears that Slovakia's autocratic ex-prime minister Vladimir Meciar could head a ruling coalition after September's general election.

'Meciar's party is the strongest in opinion polls but he has zero-coalition potential,' he said. 'Nobody wants to go with him.'

Two recent polls have indicated Meciar's Movement for a Democratic Slovakia (HZDS) commands about 28 of voters' support - the highest of all parties contesting the election.

Rival parties have either ruled out cooperating with the HZDS or insisted they would only form a coalition with it if Meciar was not involved.

His opponents argue Meciar's return to power would rupture Bratislava's cordial relations with Brussels and could stall its accession efforts.

'Everybody understands that integration with the EU and NATO is the most important thing for Slovakia,' said Miklos.

'The presence of Meciar or his party in government would be excluding Slovakia from integration.'

Slovakia is lobbying hard to retain tax breaks offered to major foreign investors in talks on aligning its legislation with EU competition rules.