No new taxes in 2021, some tax cuts planned, minister says
Ljubljana - The government does not plan to raise any taxes in 2021 or introduce new levies, such as a real estate tax, Finance Minister Andrej Šircelj said in parliament on Saturday. "The plan is to cut some taxes," he told the parliamentary Finance Committee discussing the supplementary budget for 2021.
The supplementary budget for 2021 focusses on recovery and making the economy more resilient while providing for the welfare of individuals, Šircelj told MPs.
Because of the second wave of coronavirus recovery will start later than expected, probably at the end of this year or at the beginning of next year, he said.
The 2021 budget which the National Assembly passed in November 2019 needed changes because of the stimulus packages that have been implemented so far and the ones still planned. The supplementary budget also takes into account the uncertainty abut future developments, he said.
After the government had to increase this year's budget expenditure by about EUR 3 billion because of the epidemics and lower the expectations on the revenues side, Šircelj said that a gradual increase in revenue was expected in 2021 while expenditure should stabilise.
Maximum expenditure in 2021 has been set at EUR 13.47 billion, while revenue should reach EUR 10.72 billion. The deficit of EUR 2.75 billion or 5.6% of GDP is thus expected. This year, the deficit of roughly EUR 4.2 billion is expected.
According to Šircelj, Slovenia will have to borrow EUR 6.7 billion to finance the deficit, and it will pay off EUR 3.7 billion in debts next year.
He asserted that the planned revenue still allowed for the implementation of development programmes and EU projects for boosting recovery and resilience in health, long-term care, infrastructure, environment and transport, and for promoting digitalisation, and helping businesses, tourism, culture, and science.
Some EUR 2 billion will go for investment next year, especially in traffic infrastructure, for example the second tube of the Karavanke tunnel, but also in care homes, culture, healthcare, clean water, flood protection. "We will not forget sports infrastructure either," he said.
Municipalities alone will get EUR 350 million for investments from the budget, he noted.
"We plan no tax raises in 2021," the minister said, adding that some taxes would even be cut, starting with the tax on vehicles.
A bill on a new tax system for vehicles, which is to be discussed by the government soon, will on average cut taxes on vehicles by 65%, primarily lowering the price of luxury cars.
The government also plans no raising of income tax or introducing any new taxes such as real estate tax.
During the debate, opposition MPs mostly voiced concern over the planned deficit. Andreja Zabret, MP for the Marjan Šarec List (LMŠ) and Matjaž Han from the Social Democrats (SD) find the planned borrowing excessive. Both were also critical of the planned spending.
"Spending is high and borrowing too, but one day this money will have to be returned," said Han, adding the money should be used for investments that will offer a return on investment.
Robert Polnar from the coalition Pensioners' Party (DeSUS) said borrowing was necessary to overcome the epidemic.
"Fresh borrowing is needed, but the question is how this money will be spent," said Luka Mesec from the opposition Left.
A total of 67 amendments, mostly opposition-sponsored, had been filed to the supplementary budget proposal for 2021, rearranging the distribution of EUR 700 million in funds. The committee backed four amendments worth EUR 6 million.
In line with the adopted amendments, the Culture Ministry will receive EUR 3 million to launch the project of Slovenia's Independence Museum. The amendment was filed by coalition deputy groups, and the funds for the new museum are secured also in the proposed budget for 2022, which the committee discussed on Friday.
Three amendments filed by the opposition National Party (SNS) were also backed, allocating EUR 1 million each for an extension of the Slovenjske Konjice community health centre, renovation of a kindergarten in Ormož, and the construction of sports infrastructure in border municipalities.
The committee also adopted today the budget implementation bill for 2021 and 2022.
The National Assembly will vote on the budget bills at its plenary starting on Monday.