The Slovenia Times

Real Estate Tax Meets Fierce Opposition

Nekategorizirano


The original plan involved introduction as of 2014 of a real estate tax that would replace three current property-related duties - the fee for the use of building land, the property tax and the fee for the maintenance of forest roads - but with a combined effect of doubling tax receipts.

All real estate registered in the real estate register maintained by the Mapping and Surveying Authority (GURS) would be subject to the tax, including residential and commercial buildings as well as farmland and forests.

The tax rate would range from 0.15% for residential buildings to 0.8% for commercial and industrial real estate and 0.5% for forests, farmland and building land. Non-occupied apartments would be taxed at 0.45% and unused land at 1.5%.

The taxes would be levied based on a valuation completed several years ago by GURS, which will be updated.

While there has been little opposition to the tax as such, various interest groups have taken issue with the tax rates and the inclusion of all types of real estate.

Many have also highlighted the inadequate GURS real estate register, a shortcoming which became evident two years ago when thousands of individuals stood for hours at GURS offices challenging what often turned out to be bizarre estimates of real estate value.

Farmers in particular are up in arms, arguing that levying any sort of tax on farmland and forests would render farming, already hardly profitable, uneconomical. Some have gone as far as threatening civil disobedience if the plan is pushed through as is.

The latest reactions suggest that this part of the draft bill is the most likely to be changed, as Agriculture Minister Dejan Židan sides with the farmers and their organisations in advocating an exemption for forests and arable land.

"This is the position the ministry is advocating in inter-departmental talks," Židan said yesterday.

Businesses, meanwhile, argue that the new tax would effectively be up to four times higher than the current levies combined.

The Chamber of Small Business and Craft Industries (OZS) thus proposes at least a transitional period, noting that real estate owners need to be given more time to challenge GURS valuations.

The government also plans to tax sacral buildings, which has taken it on a collision course with religious communities, in particular the Roman Catholic Church, which has thousands of churches scattered around Slovenia.

Not only is it inherently difficult to put a market value on places of worship (GURS decided to value churches at the notional value of construction), actually levying the tax could end up costing the Catholic Church millions each year.

The Slovenian Bishops' Conference has submitted its complaints to the draft bill, though the content has not been disclosed, and media reports suggest the topic had been broached in talks PM Alenka Bratušek has recently held with Pope Francis in the Vatican and Ljubljana Archbishop Anton Stres.

Indicating that the Church plans to fight the plan tooth-and-nail, the Church weekly Družina has recently suggested that the coalition is creating an "anti-religious and anti-Catholic atmosphere" in Slovenia.

As the government prepares the final draft of the bill, it will thus have to balance its willingness to concede to interest groups with the desire to raise much needed tax revenue to plug the gaping hole in public finances.

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