The Slovenia Times

Focus on Consolidation of Public Finances


This year alone budget expenditure is to be reduced by at least 5% with a supplementary budget. A bipartisan consensus has already been reached to put the golden rule, a combination of a debt ceiling and other measures, in the Constitution. Businesses will be disburdened, according to plans, as the corporate income tax rate is to be gradually reduced to 15% and tax breaks for investments in R&D increased to 100% from 40%. Administrative obstacles will be reduced, acquisition of permits simplified, as well as taxation of small businesses and sole traders. The shift to e-commerce will be promoted across the board. Personal income tax rates will be changed to reduce taxes on "the most productive workers" and a cap on the social security contributions of the highest earners will be introduced.
The coalition agreement also talks about improving the prosecution of white collar crime and creating a specialised court to handle cases of money laundering, unlawful privatisation and non-payment of social security contributions. Ownership of banks and state-owned companies will be consolidated with a view to attracting private investors. The coalition plans to "create conditions" for overcoming the credit crunch, including by forcing banks to sell housing they seized as collateral in order to free up funds. In the long term public finances will be strengthened with pension and health reforms.
According to the agreement, pensions will be frozen this year with an emergency act, whereupon they will increase based on wage and consumer price growth with a 60:40 formula. When the economic circumstances improve, average pensions should not be lower than 60% of average wages but the long-term target is 72%. Early retirement will be curbed. Pensions will depend more on years of service than on retirement age and voluntary extension of employment beyond retirement age will be intensified. Pensions will be more closely aligned with contributions. However, "decent pensions" will be provided for everyone unable to save enough.
Greater emphasis will be placed on the second and third tier (private pension funds and supplementary pension insurance). Long-term care will refocus on programmes that allow people to continue living at home. Competition will also be increased in health care as well as on the supplementary health insurance market provided that analysis of comparable EU countries shows this to be appropriate.


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