The Slovenia Times

Income tax changes delayed by opposition


The opposition Democrats (SDS) have upset government plans to reverse major portions of the previous government's income tax cuts by tabling a request for a referendum just before the National Assembly was due to take a vote on the government bill on 17 November. Due to the length of proceedings it remains unclear whether the tax changes will be able to take effect as of 2023 as planned.

The SDS said the government bill marked a U-turn on the previous government's tax policy direction, changing course from tax cuts that would have benefited all taxpayers to tax increases motivated by the misconception that the government knows better what to do with the money than workers, entrepreneurs and farmers. "The people should decide on the changes," it said.

The current government has meanwhile argued that leaving the previous government's tax cuts, which would kick in progressively over several years, risked ruining public finances just as Slovenia is struggling with a cost-of-living crisis that requires massive government intervention and hence tax revenue.

Prime Minister Robert Golob couched the move in political terms saying that "some just can't accept that they've lost the election and are using all means possible to block anything and everything".

Indeed, he noted that some opposition-sponsored changes had been included in the bill during the parliamentary procedure, including a more favourable treatment of sole traders who pay a flat tax rate.

"When we can see that the opposition's amendments are constructive and will benefit the people, we endorse them. But then, strangely, the opposition is completely against."

The linchpin of the government's plan is to keep the general tax relief that all taxpayers are entitled to at a lower level, which means more taxable income. The income tax for top earners would return to 50% instead of being reduced to 45%.

In line with the parliamentary rules of procedure, the referendum motion will be put on the agenda of the next parliamentary session. After the MPs reject the referendum motion, the changes to the income tax law will be put to a vote.

But this is not necessarily the end of the road since the SDS could still theoretically petition the Constitutional Court to check whether a parliamentary decision rejecting the referendum motion is constitutional, further delaying passage of the bill.

By design referendums dealing with public finances cannot be subject to referenda, but such referendum motions are a popular tool for the opposition to delay passage of legislation and have been used to great effect in recent years.

This was most notable during the previous government's term, when the Left stonewalled defence spending plans for months by lodging successive referendum initiatives.


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