As of the beginning of 2017, prices of some non-life insurance products, mainly vehicle and travel insurance, have started to increase in Slovakia. Insurance companies are responding in this way to a new 8-percent levy that the state now applies to every new premium.
The Finance Ministry introduced an amendment to the act on insurance in late 2016 to boost revenues to the state budget as the sector had not been subject to taxes on such products before. However, economic analysts see only a small amount of new revenue flowing to the state budget, not even percentage points of total state expenditures, in comparison with the extremely negative impact the levy may have on the market. In the economy, nothing like a free lunch exists, says Robert Chovanculiak of the Institute for Economic and Social Studies (INESS) think tank.
"If politicians increase taxes on certain products, either the consumer will pay them via higher prices, or the provider will provide the consumer with lower quality service," Chovanculiak told The Slovak Spectator. Read the full story SLOVAKIA: New levy to raise insurance premiums