Most parties support labour tax cuts, details still moot

Ljubljana, 15 May - Taxes are at the centre of the campaign running up to the 3 June parliamentary election. Slovenia is likely to see fiscal policy changes in the future, according to answers that the parties have submitted to the STA showing that most of the parties want to cut taxes on labour and support a new real estate tax.

Businesses have been calling for lower labour taxes, especially for skilled workers. Among the parties faring best in polls, the Democrats (SDS) and New Slovenia (NSi) are the strongest advocates of lower taxes.

They would lower taxes for individuals and entrepreneurs via a number of measures, including the lowering of corporate income tax and the introduction of a social contributions cap.

The SDS would also abolish the tax-certified cash registers, suspend taxes for newly established small companies and lower the VAT to the pre-crisis level.

On the other hand, the Alenka Bratušek Party, headed by the former prime minister, believes that Slovenia should preserve the VAT taxation as it is but should decrease income tax by 25% instead.

The Modern Centre Party (SMC), which has been the senior coalition partner for the past four years, said it would reward those who paid taxes regularly. It also proposes a 5% income tax allowance for investments in culture, sports and health.

The Social Democrats (SD), the Pensioners' Party (DeSUS) and the Marjan Šarec Party (LMŠ) are in favour of tax restructuring in a way that would make up for a decrease in labour taxes by increasing corporate taxes.

The LMŠ, a newcomer in national politics, promises a comprehensive tax reform within the first year.

The opposition Left advocates a considerable increase in taxes for "capital owners and on assets of greater value". This course of action would allow a decrease in consumption taxes.

Most of the parties that are projected to make it over the 4% parliamentary threshold support the introduction of a new real estate tax. However, they said the tax should not exceed the sum of the three real estate levies currently in place.

Some of the parties believe that some exceptions should be allowed in the real estate tax, while other believe the tax should be low so as not to require many exceptions. The LMŠ believes that the real estate tax should take effect in 2020.

Economy experts have been warning that any changes in this area will depend on the state of the public finances. Under the fiscal rule, which Slovenia has enshrined in the Constitution, the public finance have to be in balance.

In the event the economic situation deteriorates, this would reflect on the public finances, just as it did in 2009 following the economic and financial crisis.

The Good State echoed these concerns. The party established by independent MP Bojan Dobovšek said that parties promising significant cuts were misleading voters.

The Unity Party and the United Left, both established by former members of what is currently the parliamentary Left, said they were completely against any new taxes, bar a tax on money transactions to tax havens.

© STA, 2018