STA, 16 September 2020 - Sweeping tax cuts and simplification of administrative procedures are at the core of a deregulation plan proposed by the strategic council for debureaucratization, a government advisory body. Ivan Simič, the chair of the council, says lower taxes would lead to higher budget revenue.
"We've made sure the revenue shortfall is as low as possible, but with some adjustments we would in fact secure higher revenue," Simič told the press on Wednesday.
There are almost thirty proposals concerning taxes, including an annual cap on social security contributions for those with a monthly salary of EUR 6,000 or more, which Simič said garnered the most interest when it was presented to coalition partners on Tuesday.
The group also proposes lower capital gains and rental income tax (25% instead of 27.5%), an increase in the general tax credit to EUR 4,000 from EUR 3,500, and the abolition of a tax on luxury vehicles.
A new 10% tax rate has been proposed for income in excess of EUR 1 million. Simič said the new tax bracket would be an attractive proposition for Slovenian professional athletes and foreign athletes who may thus pick Slovenia as their tax domicile.
Similarly, the group proposes a "golden visa" for foreigners who would invest a certain amount of money in Slovenia; the current proposal is an investment in excess of EUR 1 million.
On the other end of the ledger, some sole proprietors would pay higher contributions and taxes, and all interest would be taxed as capital gains; at present only interest in excess of EUR 1,000 is subject to capital gains tax.
It has also been proposed that all employees be entitled to commuting costs at a rate of 10 cents per kilometre. At present the cost of the cheapest public transportation option is recognised.
According to the group, the vast majority of employees would thus get higher commuting costs, except those who live in major cities.
In what is potentially a major boon for sports clubs and charities, the group proposes that companies be allowed to donate up to 20% of their income, up from 0.5% at the present.
There are many other proposals concerning the simplification of reporting and registration procedures for companies and individuals, in particular when it comes to using data that state institutions can access but currently demand that individuals or companies provide themselves.
"We produce the company registration number and all documents are in one place. We also wish to ensure the management of data on all corporate entities in one registry," Simič said.
Another major set of measures concerns simplifications in the issuing of building and environmental permits.
The opposition Left said that the proposals leaned towards "new tax breaks for the rich", and that instead, the government should secure new tax revenue which would not burden the weakest ones, but property of rich people and corporate income.
The party said in a press release that the government of Janez Janša was apparently taking a direction which would "additionally exhaust the state budget and weaken the public welfare and development infrastructure in the long run."
Instead of taking care for the 90,000 unemployed, the council is worried about owners of luxury cars and a handful of millionaires. "The taxation rate for the rich would be significantly lower than those for the poorest ones."
The proposed increase in the general tax credit to EUR 4,000 would be mostly beneficial to taxpayers with the highest income, and not beneficial at all to the poorest taxpayers, the party added.
"Instead of providing the young and other socially disadvantaged persons with decent and affordable apartments, they will again take care of property owners who make money by leasing their property."
The Left is also critical of the proposed annual cap on social security contributions, as a way to make "concessions to the rich at the expense of the public health and pension purses, at the time when revenue losses are drastic."
One of the rare proposals that go in the right direction, according to the Left, is 20% taxation of income gained with trading in cryptocurrencies.