The Slovenia Times

FinMin climbs down over tax reform


"All the reactions have been quite negative," Finance Minister Dušan Mramor admitted on Tuesday as he announced the government would not be putting forward any tax changes as yet this year.

His comments come after the ten-day consultation period for draft changes to the tax legislation expired on Friday amid stiff opposition by businesses as well as a negative response by trade unions.

Practically everyone wants tax credits to be preserved and the unions are opposed to the proposed rewarding of performance as it would eliminate bilateral industrial agreements, Mramor explained.

The most controversial was the proposal to change the capital gains tax so that the rate of tax would no longer be reduced but would remain at 25% for the whole period of ownership.

Addressing a congress of the Employers' Association in Ljubljana, Mramor promised that there would be no changes to the taxation of capital gains.

"As for the other changes we've decided not to propose them yet this year, but will take time to seek solutions that will also be acceptable to business...If we find them, we'll find them, if not, there won't be any."

Mramor said the tax changes had been drawn up for the sake of businesses, but added that the fiscal consolidation Slovenia had committed to implement by 2020 was unfeasible trough tax cuts alone.

His comments come after his proposals were also rejected by the ruling coalition Modern Centre Party (SMC) on Monday.

The withdrawal of the proposed reform was welcomed by representatives of businesses at a press conference, which called on the government to include businesses as an active partner in the drafting of new tax legislation.

Business representatives want a comprehensive tax reform which would be a product of dialogue with various stakeholders, and which must be development-oriented.

According to Samo Hribar Milič of the Chamber of Commerce and Industry (GZS), businesses were bothered the most by the proposed taxation of capital gains and the reduction or abolition of certain tax breaks.

Head of the Managers' Association Aleksander Zalaznik said that "if we want to invest more money in development, as many profit as possible needs to be available, and this is why profit intended for development must be taxes as least as possible".

Business representatives meanwhile welcomed in principle the idea of lower taxation of the 13th and 14th salaries, but believe that the current proposal is very complicated and that it would not result in lower labour costs.

Zalaznik stressed that the tax burden on the economy should be reduced in order for it to develop. "They want to patch up the budget hole with higher taxes," he said, calling on the Finance Ministry to be more creative when it comes to budget planning.

Head of the Employers' Association Milan Lukić also welcomed the withdrawal of the reform, which according to him failed to take into account a single proposal from employers. "Now we will be given the opportunity to participate in the drafting of new proposals," he added.


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