The Slovenia Times

Parliament Endorses Changes to Tax Legislation, Pension Reform


Parliament also passed the proposal to publish the names of tax debtors owing more than EUR 5,000 for at least 3 months. While all deputy groups backed the two laws on income tax, many of them believe that the cap for the optional flat-rate tax scheme for micro companies was set too low. Roman Žveglič of the coalition People's Party (SLS) stressed that only some 1,000 companies would fall under it.

He noted that the SLS would back the changes, but expected to see an analysis carried out after the implementation. Subsequently, the party will decide whether to demand figures be changed, Žveglič said.

Changes to personal income tax act meanwhile also envisage certain cuts into tax breaks, including into a special tax break for student, which will be reduced by a quarter.

MPs however did not scrap the break for personal income of cross-border migrants, which was originally proposed by the government.

Meanwhile, changes to corporate income tax act envisage that tax breaks for loss in previous year be halved. They will also gradually lower companies' tax rate from 18% to 15%.

Apart from that, the National Assembly also backed the introduction of a financial services tax under which financial services, mostly commissions, that have so far been VAT exempt, would be taxed at a 6.5% rate. The government expects the new tax to bring in some EUR 30m per year.

Also in the package passed today was the government proposal to publish the names of tax debtors who had been owing more than EUR 5,000 in tax for at least three months.

While all groups endorsed the motion, the opposition expressed doubts that it would have the desired effect of shaming debtors into paying taxes and battling grey economy. Social Democrat (SD) Mirko Brulc noted that instead, the system of collecting taxes should be improved.

Apart from passing changes to tax legislation, MPs got acquainted with the government decision to bin the contentious selective VAT rise. The planned raise was to bring some EUR 70m into the budget per year, but the parliamentary Finance and Monetary Policy Committee backed the government decision on Tuesday.

Instead, the government plans to raise excise duties on fuel, electricity, alcohol and tobacco, as well as tax sugary drinks. "We understand that other measures will have to be made to ensure that the budget deficit be reduced," Andrej Šircelj of the ruling Democrats (SDS) said.

Welcoming the decision to scrap the selective VAT rise, Matevž Frangež of the SD however noted that the government should be careful in its next steps. He finds raising duties for electricity especially problematic, which is why the SD proposes that the government abolishes corporate income tax cuts in 2013.

The National Assembly also endorsed unanimously the pension reform on Thursday as part of an emergency session dedicated to the second reading of the reform and changes to tax legislation. The reform could already be passed next Tuesday.

The reform is aimed to secure the sustainability of Slovenia's pension system and while negotiations with social partners as well as pensioners and students will continue until the reform is passed, Labour, Family and Social Affairs Minister Andrej Vizjak said.

He believes that social partners will find common language on the remaining open issues until next Tuesday, when the reform is to be put to the final vote in parliament.

According to the minister, negotiators still have to agree on pension rates and the provision abolishing time spent for studies to be included in pensions, which the trade unions want to be implemented gradually.

The reform bill raises the retirement age to 65 or to 40 years of service, while certain provisions that unions did not consent to were crossed out. Crucially, unions managed to persuade the government to keep pensions which do not stem from contributions paid in the pension purse.

Apart from that, the solution to adjust pensions to wages in 2013 up to the total amount of EUR 50m was also adopted to placate the coalition Pensioners' Party (DeSUS), which had refused to agree to a freeze on pensions next year.

The new reform is based on the bill drafted by the previous government, the minister noted, adding that the government wanted to close the issues social partners had with the bill last year.

In a short debate before the 82-0 vote, the opposition welcomed the decision to shelve the contentious provisions.

Social Democrat (SD) Majda Potrata noted that abolishing the provision that would transfer certain pensions from the pension legislation to other laws would be unconstitutional. Barbara Žgajner Tavš of Positive Slovenia (PS) said that she "believes that we have found key solutions in consensus".



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