Parliament endorses tax cuts

Ljubljana – The National Assembly endorsed on Friday amendments to the income tax act that bring higher take-home pay across the board, lower tax on capital gains and a lower top tax rate.

The legislation was slated for passage late last year but was put on the back burner because the coalition did not have a majority in parliament and due to the threat of a referendum pushed for by the Left.

But after Prime Minister Janez Janša in January raised the prospect of holding the referendum along with the general election in April, the Left abandoned the plan and said it would try to tweak the legislation after the election.

The vote was 45 in favour and 40 against today, the missing votes provided by MPs of the National Party (SNS) and Pensioners’ Party (DeSUS), which are opposition parties but tend to vote with the government.

The centrepiece of the legislation is a gradual increase in the general tax relief that all taxpayers are eligible for. It will rise from the current level of EUR 3,500 to EUR 7,500 by 2025.

Average pay would thus net EUR 260 more in 2022, EUR 520 more in 2023, EUR 780 more in 2024 and EUR 1,000 more in 2025, according to Finance Ministry calculations.

The tax rate in the highest income bracket, for those making more than EUR 72,000 per year, will be cut from 50% to 45%, and income tax brackets will be indexed to inflation.

The rate of tax from income from interest, dividends and profits has been cut from 27.5% to 25%, with tax-free status kicking in after 15 years of ownership.

Rental income tax will be reduced from 27.5% to 15%, which is coupled with a reduction in normalised costs.

Several other kinds of tax relief will be available for seniors over the age of 70, firefighters and civil protection members, and employers hiring people below 29 or over 55 years of age.

The government has billed the tax cuts as a much needed relief in Slovenia’s high-tax business environment that will promote competitiveness and ensure sustainable economic growth, and business organisations have welcomed in particular the prospect of lower labour costs for high-skilled professions.

The centre-left opposition and trade unions, on the other hand, have described the legislation as handouts for the wealthy that will impoverish the tax coffers and make it more difficult to finance social programmes.