The fear of reforms echoed from the streets
The Association of Free Trade Unions (ZSSS), KNSS Independence, KS 90 and Pergam trade union federations have been voicing fierce opposition to the planned reforms, notably the flat tax rate and curbs on social rights. They believe that the measures will have a harsh negative impact on the poorest, as the flat tax would increase the price of essentials. At the same time, the rich would pay fewer taxes. The government namely plans to finance the revenue fall-out with the raise in value-added tax rate, a move that the trade unions say would increase the price of food. The government reform committee is misleading people by claiming that retail prices will not go up as a result of a 20% flat tax rate from the current 8.5% VAT, said Mr Igor Mervic the CEO of one of the main chains of shops in the country, Spar. "Of course we'll raise prices. We'll be unable to avoid it if a flat tax is introduced. What they'll give companies through tax changes, they'll take away from consumers," Mr Mervic explained in an interview with the daily Dnevnik. The protests drew tens of thousands of people; indeed, the unions shipped in 400 buses of people from around the country. While the unions said there were around 40,000 people taking part in the protests, the police asessed their number at more modest 25,000. The unions have also received letters of support from over 30 unions across the EU. The government, which adopted the reform blueprint in the beginning of November, insists that the unions have jumped the gun. Government officials have repeatedly stressed that social partners could have closed all the open issues as part of the social dialogue between the government, unions and employers. However, the government reform committee has said that the intrduction of flat-tax represents a framework that will make all other reforms possible in the first place, thus sparking fears that a radical tax reform is non-negotiable. Trade unions claim that the revenue fall-out resulting from the introduction of flat tax will be partly financed by the privatization of health system and cuts in social transfers. Students and secondary school students were also among the protesters, mainly due to the proposed liberalisation of higher education and because their proposals regarding the changes to the income act have been completely ignored by the government reform team. Pensioners, who mainly oppose the reform of the pension system and the privatisation of the health sector, also took part.