Šarec Hints at Tax Cuts & More Flexible Labour Market in Business Club Meeting

By , 05 Feb 2019, 17:49 PM Business
Prime Minister Marjan Šarec Prime Minister Marjan Šarec vlada.si

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STA, 4 February 2019 - Calls for structural reforms, in particular lower taxes and a more flexible market, were in the centre of a Slovenian Business Club (SBC)-sponsored meeting in Postojna, which featured some of Slovenia's top business and state officials. Prime Minister Marjan Šarec promised changes, while also noting the importance of preserving the welfare state.

Šarec told the meeting, which brought together around 300 successful entrepreneurs and several cabinet members, that the government would draft a package of measures before the end of the year, "measures that you've perhaps been wishing to see for a while".

He expects the measures will again cause a storm in the public, but "there is no action without a reaction".

Šarec, however, went on to stress that the welfare state was also needed, "since things that it provides for everybody - such as education, healthcare and other services - are not unimportant".

Šarec, who acknowledged the economy was slowing down but argued it was too early to speak of a crisis, rejected comparisons with Switzerland, which is being looked to at the meeting for inspiration on how to increase added value.

"If we continue to wonder how to become another Switzerland or somebody else, we'll probably fail to meet the desired goals and results. No system has only pluses and no system has only minuses," the prime minister said.

Marjan Batagelj, the chairman and majority owner of Postojnska Jama, the operator of Postojna Cave, said it was time for concrete measures, calling for lower taxation of wages and greater labour flexibility.

"We must not become a tax island. All countries around us are reducing taxes and we need to make sure our business environment is competitive," said Batagelj, while at the same time calling for a more effective education system.

He pointed to Switzerland as an example of a country where politics is constantly coordinating its actions with business.

This was echoed by Heinz Karrrer, the president of the biggest economic organisation in Switzerland, Economiesuisse, who said politics should listen very carefully to the needs of business when it comes to creating jobs.

The afternoon part of the meeting, which also featured Economy Minister Zdravko Počivalšek, Finance Minister Andrej Bertoncelj and Labour, Family, Social Affairs and Equal Opportunities Minister Ksenija Klampfer, looked in more detail at the forthcoming measures in Slovenia.

Bertoncej said the government would present measures coming as part of "comprehensive tax optimisation" to social partners within a month.

He called for an all-encompassing review, noting that while labour was taxed heavily in Slovenia, the tax burdens on capital were lighter than in other countries.

Promising that the business environment would remain predictable, Bertoncej also announced a gradual introduction of measures, with the biggest batch expected in 2019, to be followed by individual measures in 2020 and 2021.

Among concrete measures being mulled by the government, he mentioned easing taxation on the holiday allowance, changes to income tax brackets, to general income tax allowance, as well as to the corporate tax rate.

Bertoncelj, who also sees reserves as regards the effectiveness of the public sector, added that macroeconomic stability would be the priority focus of the ministry.

Economy Minister Počivalšek highlighted labour force shortages as a key factor undermining growth, suggesting that focusing on raising the average wage would have been better than the recent focus on the minimum wage.

He added that "a step forward" could also be possible when it comes to expanding possibilities to lay off unmotivated staff.

Labour Minister Klampfer also called for reducing the tax burden on labour "across the entire vertical", while stressing the need for social dialogue.

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