The Slovenia Times

FinMin Happy with Budget, Disappointed Over Banks Restructuring

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The biggest minus in his opinion is the six-month delay in banking system reconstruction which will cost Slovenia two quarters of economic growth.

"This is happening to us at a time when the entire Europe follows expansionary monetary policy and financial repression which at this moment is the most appropriate combination of economic policies."

"Meanwhile, our monetary conditions are much more limiting due to problems in the banking system and over-indebtedness of companies despite having the same central bank and currency as the rest of the eurozone," said the minister.

He believes the government must be careful when it comes to additional measures and extensive cuts in budget expenditure. "Also because many more people would end up unemployed."

"In order to afford sharper cuts in public expenditure the private sector would have to be strong enough to pull the cart and employ people," he said. "If we managed to help the banking system, we could squeeze budget expenditure tighter."

In terms of changes to fiscal policy in Slovenia, he believes it is better to prepare as many long-term taxes as possible than to spend a long time negotiating on temporary taxes that would be in place for a year.

"I believe something bigger, structural, happened in this crisis. We must be aware that we will start from a lower level once economic growth is restored. Therefore we must prepare with lower budget expenditure. We can start increasing expenditure once it starts going better for us again. But we're not that far yet."

Touching on the planned real estate tax, ÄŒufer believes the tax will improve the existing "distorted" system of building land contributions under which each municipality can do whatever they please.

"We will unify this with the new tax while also allowing municipalities to follow their local policies. But naturally, this will bring several re-arrangements therefore some will be better off while other will be worse off."

He underlined that Slovenia, especially its companies, needed stable taxes. "I believe that we have to say out loud that we will no longer change taxes so that companies wanting to invest will know how much taxes will cost them."

The finance minister also wants to see the pensionable age raised. "If life span increased from 60 to 100 years and we used to work until we were 50 years old - meaning we worked for 30 years and spent 10 years in retirement - how should we now work for 30 years and then spend 50 years in retirement?"

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