Why we need European cultural policies: the impact of EU ...

In regard to other taxes, opinions were split: approximately half responded that there had been nosignificant changes in tax rules, and half said that there had been some important changes relatingto culture. It is also important to note that this was not necessarily linked with the harmonizationwith the acquis communautaire; it could be better described as a consequence of policy transfer(see footnote 8). This means that the rule changes have not been imposed by the EU but ratherhave resulted from a country having decided to follow the majority thinking in Europe, even when ithas meant changing some practices specific to the society.In this context, it is worth mentioning two examples where a flat rate of tax was introduced.Romania has a flat tax rate of 16 per cent on incomes and on goods; Slovakia of 19 per cent.`Slovakia is a special case in terms of tax policy. Since 2004 we have acompletely new tax system based on the flat tax principle (all tax rates unified oncertain level – in our case it is 19 per cent), which is rather unique in Europe.It was adopted by the current right-wing government and is not highlyappreciated by EU.a) equal tax rate (19 per cent) for all personal and corporate tax income groupsb) all tax deduction were in general abolished (included for arts)c) there exists a new possibility for support from public sources: all taxpayers havethe right to order the tax administration to assign 2 per cent from their personalincome tax or corporate tax for social benefit purposes (included for arts)This reform had [a] very negative impact on cultural sector, since none of thecultural products were exempted from the 19 per cent VAT and also the incometax has become a problem, since it has lowered artists’ incomes and complicatedemployment in artistic sector.’(Slovakia)Some other tax rule changes that had a negative impact on taxation of the artists’ income includedthe Slovenian example:`From January 2005, authors lost their rights to a 40 per cent income taxdeduction on material expenses. This deduction has been reduced to 10 per cent.Self-employed persons in the field of culture continue to have the right to deduct40 per cent from their income tax base, if they earn less than 5 million SIT. If theyexceed this amount, they must provide accounts and receipts to justify the actualcosts. However, these changes are not consequences of the harmonization withthe acquis communautaire however, this decision by Slovenian authority wasinspired by practice of other European states that usually do not have any specialprovisions for authors.’(Slovenia)52Part 2 The impact of EU enlargement: results of the survey of researchers and policy-makers