Parliament Rejects Proposal to Cut Personal Income Tax

By , 17 Apr 2019, 16:38 PM Business
Parliament Rejects Proposal to Cut Personal  Income Tax CC-by-2.0

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STA, 16 April 2019 - The National Assembly voted down the Democratic Party (SDS)-sponsored amendment designed to cut the personal income tax on Tuesday, thus paving the way for the adoption of the government proposal to abolish tax on the annual holiday allowance up to average monthly pay.

In its third such proposal since 2017, the opposition party sought to reduce tax rates for all income brackets by two percentage points, raise brackets by EUR 2,000 upwards, and increase the general tax credit from EUR to 3,300 to EUR 4,000, as well see to its adjustment with inflation.

The party argued that labour taxation in Slovenia was among the EU's highest, which made Slovenian businesses less competitive and less productive because they could not spend enough money on research and development. The high taxation was also blamed for the brain drain.

The party calculated that the amendment would result in a loss of revenue from income tax of EUR 387m, which would be offset through higher receipts from VAT as a result of an increase in consumption.

The Finance Ministry estimated the loss of revenue at EUR 383m and the increase in VAT revenue at EUR 19m. The government and coalition MPs argued that the loss of revenue would thus be excessive.

The only other parties to back the SDS proposal were the fellow opposition New Slovenia (NSi) and National Party (SNS).

Now that the SDS amendment is off the table, the National Assembly will be able to move on to the government-sponsored amendment which increase the threshold at which the holiday allowance is exempt from taxes and contribution from 70% to 100% of average pay.

The parliament is expected to pass this proposal at a session due on 25 April.

The current session wrapped up today after only two days of proceedings, including Monday's questions time.

All our stories on tax in Slovenia are here

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