The Slovenia Times

National Assembly slightly reduces taxes on labour


The bills, which Bertoncelj argued would particularly reduce the tax burden of highly skilled workers, slightly increase the thresholds for all five brackets and raise the general tax credit.

In the second and third tax brackets, which cover mostly the middle class, the tax rate will drop by a percentage point to 26% and 33% respectively. Those on the minimum wage will see their earnings rise only marginally, while those on average pay can expect roughly EUR 150 more per year.

The government was initially planing to raise the threshold for the highest income bracket, involving 50% taxation, by over EUR 9,000 to EUR 80,000, but the coalition settled for EUR 72,000 after facing pressure, in particular from the Left, the minority coalition's tentative opposition partner.

The Left insisted today that the changes are primarily a handout to the "5% of the highest-paid". "This will cost us EUR 135 million," the Left's leader Luka Mesec said, suggesting this money should instead be used for housing.

According to the Left's calculations, the changes give those on the minimum wage 1.60 euro more per month, those with the average wage will get 12 euro and the top paid managers 92 euro. "This is no reduction of the burden for the middle class but a tax reform for the rich," the party's MP Miha Kordiš said.

Bertoncelj on the other hand said the changes were about "reducing the burden on labour, so that the workers have more income and greater purchasing power, which will also increase domestic consumption and allow us to at least partially offset decreased exports".

Adding that "we all wish to do even more ... but the public finances are constraining us," the minister said the government would propose additional measures in several stages, stretching them out over four or five years.

He warned against the proposals of a part of the opposition which would entail a more radical intervention in the income tax brackets.

The coalition parties welcomed the package, including the higher capital gains tax, which will rise to 27.5% from 25% - this rate will also apply to rental income - and the introduction of a minimum corporate income tax rate of 7%.

Marko Bandelli of the junior coalition Alenka Bratušek Party (SAB) for instance noted that these capital levies were lower in Slovenia that in other countries.

The government scrapped the plan to also increase corporate income tax rate - from 19% to 22% -, which earned Bertoncelj praise today from the coalition Modern Centre Party's (SMC) Monika Gregorčič who spoke of the shy nature of capital.

The NSi's Matej Tonin was quick to agree, arguing that "if taxes are too high, people start looking for all kinds of options for optimisation".

Suggesting taxes should be as low as possible, Tonin added that everybody should pay them, he however disagrees with the introduction of the minimum corporate income tax rate.

While Tonin argued this would affect those investing generously in research and development, Robert Polnar of the coalition Pensioners' Party (DeSUS) disagreed, saying the impact would be negligible since such investments were a must for companies these days.

The opposition Democrats (SDS) on the other hand took issue with Bertoncelj's claim the lower taxation of labour would necessarily result in higher take-home pay. "If employers reduce gross wages, there will be no increase in net pay," the SDS's Andrej Šircelj said.

The National Party (SNS) expressed support for the changes, its MP Jani Ivanuša for instance arguing that the minimum corporate income tax rate should have already been introduced years ago and could easily also be set at 10%.


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