The Slovenia Times

Austerity Budgets Passed in Parliament


The budget acts project revenue of EUR 8.6bn for 2013, up EUR 650m compared to this year's budget, and expenditure of EUR 9.6bn, up EUR 600m. In 2014 revenue is to drop to EUR 8.4bn and expenditure to EUR 9.3bn.

Expenditure has been trimmed across-the-board in order to meet the deficit target, most notably with the requirement that budget users reduce the wage bill by 5%.

The figures already take into account the recently adopted pension reform, which will kick in next year and produce savings by cutting budget outlays due to stricter retirement conditions and lower indexation to wages; in 2013 alone savings of EUR 150m are expected.

Savings will also be made with the reduction of the per capita income tax allocated to municipalities, which will drop from EUR 543 to EUR 536, and lower funding for Ljubljana under the capital city act.

On the revenue side, the government has budgeted very high inflows of EU funds, which the opposition as well as economists claim are unrealistic.

Moreover, the introduction of a temporary 50% tax bracket and higher taxes on rental income, student work, capital gains, excise, and taxation of sugary drinks are projected to raise revenue by EUR 300m cumulatively per year.

The deficit will be financed with borrowing of up to EUR 9.14bn over the two-year period, which includes one billion that will be earmarked for the financing of the bad bank.

The government claims the budgets provide plenty of scope for incentives to businesses aimed at kick-starting growth, whereas the opposition insists they will hamper the recovery with excessive belt-tightening.

The budgets went through parliament virtually unchanged, as hundreds of amendments put forward mainly by the opposition were rejected.

However, two amendments that increase spending were confirmed today, under pressure from the education and science sector, which is subject to some of the deepest funding cuts.

MPs thus reinstated EUR 16m for higher education and EUR 23.7m per year for financing food for schoolchildren and students.

The decision came amidst a protest featuring several thousand students and teachers who decried austerity in front of Parliament House today.


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