Ljubljana - The Chamber of Commerce and Industry (GZS) is unhappy with the government's plan to revoke parts of the tax reform adopted by the previous government, including a continued increase in the general tax relief for all earners.

In a written response to the proposal, the GZS hails the government's plan for a comprehensive tax reform to be be passed by 2024.

It notes that taxation of individuals affects directly how much the population are spending, how they manage their assets or savings and what pay demands they place on their employer.

The GZS approves of the increase in the general tax relief, but thinks the increase planned by the incumbent government is not sufficient. It means a lower growth in household spending in a year where the challenge will be to attain economic growth, they say.

Under the reform passed under the previous government the general tax relief is being raised from EUR 3,500 to EUR 4,500 this year. However, instead of going up by an additional EUR 1,000 in each of the coming three years to reach EUR 7,500 in 2025, the current government proposes a rise by EUR 500 in 2023 only.

The GZS welcomes the proposal to increase the tax relief for young people "as one of the levers to stimulate their becoming employed". However, instead of two different amounts for two different age groups they propose a special relief amounting to EUR 1,000 for all young up to the age of 29.

The government proposes for the special relief for those aged 26 or less to be EUR 1,000 but only EUR 500 for those over 26 and up to 29 years of age.

The GZS is also unhappy with the plan to scrap automatic indexation of tax reliefs to inflation, "as inflation-induced wage increases in 2022 will be more heavily taxed as a result".

Instead, they propose automatic indexation of tax bases in case of 2% inflation in the previous year, 90% indexation if inflation is 2-4% and 80% indexation if inflation is above 80%.

They find the proposal to raise the top personal income tax rate and to change the tax treatment of performance bonus as a step back from the efforts to provide competitive conditions to attract highly-qualified talent. They say the changes could induce companies and individuals to move residence to other tax jurisdictions.

Meanwhile, the GZS hails the option for companies to be able to pay out business performance bonuses twice a year.

The chamber regrets that the Finance Ministry has failed to come up with bolder solutions to amend the flat-tax rate system used by the self-employed and sole traders to prevent a surge in such subjects.

It also does not approve of a return to a higher rate of rental tax and tax on proceeds from the sale of shares in the context of acquisition of a company's own shares as dividends.

For the latter they propose a compromise solution to limit sale of own shares to 10%, the cap applying to own shares of public companies under the companies act. Stakes above that threshold would be taxed as dividends.