Local_Taxes_Slovakia_QnA 1. How does the Slovak system of local taxes (LT) reflect the principle of fiscal decentralization enshrined in the Slovak Constitution? Answer: The system grants municipalities the authority to administer and impose most local taxes and fees, in line with Article 65 of the Slovak Constitution, which emphasizes that municipalities finance their needs primarily from their own income. However, this decentralization is limited in practice due to municipalities’ continued dependence on state transfers and subsidies. 2. Why is real property tax (RPT) considered the only local tax with significant budgetary impact in Slovakia? Answer: RPT contributes approximately 7–8% of municipal revenues and 0.4% of GDP, making it the only local tax with notable fiscal weight. Other local taxes exist but generate minimal income, thus lacking real budgetary significance and highlighting an imbalance within the LT system. 3. What are the implications of municipalities having voluntary imposition powers over most local taxes in Slovakia? Answer: While voluntary imposition supports local autonomy, it leads to disparities in tax policy and revenue capacity across municipalities. Some may choose not to levy certain taxes at all, resulting in an uneven fiscal landscape and potential underfunding of municipal services in less proactive regions. 4. Considering the average share of local taxes and fees in municipal budgets is only 11%, how does this affect the financial independence of Slovak municipalities? Answer: The low share significantly undermines financial independence, making municipalities reliant on central government transfers and subsidies. This contradicts the principle of sufficient and diversified local resources as outlined in Article 9 of the European Charter of Local Self-Government. 5. How does the dual structure of tax legislation—state-level acts and municipally adopted binding regulations—shape the effectiveness of local tax administration? Answer: While state legislation ensures uniform legal standards, municipal regulations enable customization to local needs. However, this duality may also result in inconsistencies, administrative burden, and variation in enforcement, which can weaken overall effectiveness and transparency. 6. Why is reforming the real property tax (RPT) considered crucial in the context of municipal financial sustainability? Answer: Given RPT's relatively high revenue potential compared to other local taxes, reforming it could significantly increase local fiscal capacity. A more progressive, betteradministered RPT could reduce state dependency, enhance equity, and support municipal investments without excessive reliance on borrowing. 7. In what ways does Slovakia’s municipal funding system deviate from the standards set by the European Charter of Local Self-Government? Answer: Although the Charter was accepted in 2007, Slovakia still falls short in ensuring sufficient, diversified, and autonomy-aligned funding for municipalities. In practice, limited LT revenue, centralization of major tax sources, and insufficient consultation mechanisms reflect incomplete implementation of the Charter’s provisions.