Govt ushered into office with huge tax row
Ljubljana, 17 December - The government of Prime Minister Marjan Šarec got a frosty reception from business, which triggered a massive row over taxes due to the prospect of capital gains taxes rising significantly before the new ministers even took office.
Gorizia, Italy
An airplane being assembled in Pipistrel's Italian factory.
Photo: Rosana Rijavec/STA
The trigger was a provision in the coalition agreement that says capital gains, currently subject to a flat rate of 20%, would be taxed progressively like any other personal income, which would mean the top earners would be paying 50% tax on their capital gains.
Even as the coalition partners played down the clause as merely a proposal that would not necessarily be implemented at face value, and stressing that any such change would form a part of a much broader tax restructuring, the business community spent weeks protesting what they described as a move that would kill business incentive.
The Left added fuel to the fire when Miha Kordiš, a firebrand MP, appeared to threaten businesses with nationalization after accusing them of usurping wealth created by workers.
The prospect of higher taxes prompted businesses to resort to precautionary measures. Ivo Boscarol, the boss of light aircraft maker Pipistrel, relocated much of production to Italy saying he would not just wait around to be nationalized. The move came as a bombshell, but it had in fact been planned for years for entirely different reasons.
Igor Akrapovič, the boss of exhaust maker Akrapovič, announced he would pay out dividends immediately to avert a potentially devastating tax bill. By the end of the year many more business owners followed suit, even as neither the new capital gains taxation nor a comprehensive tax reform materialized. When tax reform is on the agenda again, at least the positions on capital gains tax will have already been staked.