Tax reform to test bond of cabinet allies _x000d_

14.11.2005 Source: Dnevnik

A raft of surprising tax proposals tabled by NDSV is gently rocking the boat of its partnership with socialist BSP and DPS in the ruling coalition. NDSV has suggested a breakdown of the income tax brackets as follows: untaxable floor of 180 levs, a 21% rate on income exceeding 180 levs and a 24% rate on income exceeding 600 levs. The threshold for registration under the VAT Act is proposed to be lowered from 50,000 to 25,000 levs while the one-off tax under the Corporate Income Tax Act to be reduced from 17% to 7.5%. The proposals elicited a lukewarm response from BSP while DPS has refused to comment on them. Although the socialists find NDSV's ideas reasonable, their response has been largely negative due to the unexpected an uncoordinated nature of the move. NDSV has indicated it will not try to legislate its proposals at any cost and is amenable to a compromise, especially as regards the dominant force in the three-way coalition. The adjustment of the VAT registration threshold has long been on the agenda of the local business community and has gained popularity among some socialist MPs.