Coronavirus Takes its Toll (April 2020)
While tax and social security contribution revenues increased by 5.7 % in 2019, they are expected to drop by 6.9 % this year due to the coronavirus. The main reason is a significant decline of the Slovak economy. The forecast assumes a similar rate of decline in corporate profits and a lower willingness to pay taxes inspired by the developments in 2009. The loss of revenue will be exacerbated by economic measures aimed at reducing the effects of the coronavirus on the Slovak economy. From 2021 onwards, we expect a slow recovery of revenue in line with the renewed growth of economic activity. Compared to February estimates, i.e. before the outbreak of the coronavirus in Slovakia, revenues fell by almost EUR 3.1 billion this year. The uncertainty associated with the development of the current recession is high, which we tackle by presenting alternative risk scenarios. In the event of a worse development, the decline in revenues this year may be even more pronounced, by up to EUR 3.7 - 4.2 billion.