The Commission this week released a publication on labour taxation in Slovenia, which apart from the impact on the GDP also shows that effects of high labour taxes are even more profound in countries with population ageing and a decline in active population.

The publication takes into account the impact of recent relevant measures and compares them with alternative scenarios, presenting potential losses and synergies.

Based on the Commission's macroeconomic model QUEST, a shift of labour taxation in Slovenia towards capital taxation would be less favourable for economic growth compared to a shift towards property taxation, which is relatively low in Slovenia.

Meanwhile, the EUROMOD macroeconomic model indicates that labour tax cuts could lower income inequalities and increase workforce availability.

Due to the outlined risks, international institutions are advising the government to implement labour tax cuts and introduce less growth distortive forms of taxation.

Employers in Slovenia have been complaining about high labour taxation for a while. The Chamber of Small Business (OZS) said on Tuesday that it would support the new mandatory insurance contribution for long-term care, which has been proposed to stand at 1.47% of gross wage only if the government reduced the tax burden from labour, saying that labour taxation in Slovenia should be on par with other EU countries.