Ljubljana related

26 Feb 2020, 12:13 PM

STA, 26 February - The coalition government that is being formed by Janez Janša is planning to reintroduce military conscription, effectively secure the border, decentralise the country and increase local government funding, as well as introduce a general child benefit.

This follows from a 13-page draft coalition agreement obtained by the STA. The draft was initialled on Monday by Janša's Democrats (SDS), New Slovenia (NSi), Modern Centre Party (SMC) and Pensioners Party (DeSUS), but unofficial information indicates the parties have already signed the agreement.

Under the draft, the partners plan to gradually reintroduce conscription, which Slovenia abandoned in 2003, and a six-month military service. They also pledge to "tackle the situation" in the police force and consistently implement asylum procedures.

More on the conscription plans here

The parties have also committed to implement the Constitutional Court ruling mandating equal funding of private and public primary schools, and complete the system to fund science and research.

The per-capita funding of municipalities is to be raised to EUR 623.96 in 2020 and EUR 628.20 in 2021, which compares to EUR 589.11 and EUR 588.30, respectively, under the valid budget implementation act.

The coalition pledge to put in place a housing scheme for young families, build rental flats and establish a demographic and pension fund, headquartered in Maribor. Slovenia's second city will also host a government demographic fund. Pension rights are not to be changed.

The coalition also plan to reform social transfers policy and introduce free kindergarten for second or more children simultaneously enrolled in pre-school care and education. Family-friendly policies also include plans to introduce a universal child allowance.

The coalition pledge to secure extra financing from pubic and other funds in order to establish a financially sustainable and stable financing of the national health system and long-term care, and take effective measures to cut short waiting times in healthcare by engaging all staff resources.

The commitments include adopting legislation on long-term care and reforming the healthcare and health insurance act to change the management and functioning of the Health Insurance Institute and transform top-up health insurance.

Under the plans, employees will be able to take three days of sick leave without seeing a doctor, but only up to nine days a year. Measures are also planned to increase the vaccination rate and to set up an agency for quality of medical services.

The coalition have also committed to reduce taxes on performance bonuses and to reform the public sector wage system by pegging part of pay to performance.

Plans in the judiciary include making court rulings fully public and giving judges the option to pass dissenting opinions. Legislative changes are to affect the Judicial Council, state prosecution service, insolvency law and penal procedure.

The foreign policy agenda includes a pledge to support Western Balkan countries in their integration in the EU and NATO.

Other concrete projects include introducing e-motorway toll stickers and considering the option to transfer the Koper-Divača railway project and its manager 2TDK to the national railways operator.

The coalition would also like to reform land policies and the Farmland Fund, amend the co-operatives act and regulate production and use of cannabis in medicine and industry.

The coalition agreement sets out that the partners are taking the responsibility to manage the state according to voters' will, constitutional values, and rights and obligations as set forth in the agreement, based on the principles of equality and partnership.

The coalition pledges to focus on what connects and unites people in the country, and to advocate cooperation based on the willingness to work for the common good.

Under the draft, the SDS will be responsible for the departments of home and foreign affairs, finance, culture, which includes media, as well as the environment, diaspora and cohesion. The SMC was allocated the briefs of education, economy, public administration and justice, the NSi labour, infrastructure and defence, and DeSUS health, agriculture and the demographic fund.

11 Jan 2020, 11:17 AM

The covers and editorials from leading weeklies of the Left and Right for the work-week ending Friday, 10 January 2020

Mladina: Pahor is undermining government

STA, 10 January 2020 - In Friday's editorial, the left-leaning Mladina analyses two of President Borut Pahor's recent public appearances only to draw the conclusion that he is undermining the Marjan Šarec government to pave the way for Janez Janša of the opposition Democrats (SDS). The party won the 2018 election.

In his 30 December interview for TV Slovenija, Pahor clearly indicated that he does not like Prime Minister Šarec and that Šarec should leave the premiership to Janša.

"This was harsh manipulation by the president and an attempt to picture the situation in the country as strained and abnormal," says editor-in-chief Grega Repovž.

His attempt to fuel uncertainty and question the government's legitimacy has failed, having had no response, but the president nevertheless behaved oddly.

Pahor hinted at his discontent a few days earlier in his Independence Day speech, in which he presented his view that consensus politics was in a serious crisis.

Repovž admits Slovenia has a far-right party which spreads intolerance, namely the SDS, various militias have been popping up and hate speech is a problem.

"But this is not what Pahor meant. On the contrary, he wanted to say that he does not find it right that political parties refuse to cooperate with the SDS and Janša."

In the interview Pahor took a step further; while admitting the coalition has secured political stability, he indicated the government should now embark on reforms even at the cost of its own collapse.

Mladina says in the editorial headlined Pahor, the Manipulator that the president's statements are full of manipulation and deceit.

He pictured political stability as a source of instability, and said reforms were needed for Slovenia's revival, but Repovž wonders what revival he had in mind when Slovenia has one of the highest GDP growth rates and one of the lowest public debts in Europe.

Repovž believes Pahor's manipulation is aimed at creating the impression that Slovenian politics is in an emergency situation which needs to be stopped right now, so he in effect advised Šarec to cause his government'collapse by himself.

Mladina admits neither the government not Šarec is ideal, and ministers do not deserve As, which should provide Pahor with enough material for justified criticism.

"But Pahor is not interested in content, he is bothered by Šarec and by the fact the government is not led by his favourite politician Janša. This is the bottom line.

"He is thus willing to portray the situation as an emergency. What is most worrying is his superiority and his attempt to show that it is not legitimate if the government is run by this coalition, which is something a serious president cannot afford."

Demokracija: How the rich help the poor

STA, 9 January 2020 - As first consumers of very expensive goods, the rich have in fact helped reduce social inequality, so there is no need to raise taxes for them to channel more money towards the poor, the right-leaning weekly Demokracija argues in its editorial on Thursday.

It was an invaluable experience to listen to all sorts of leftists before the New Year saying they would continue their fight against exploitative capitalism, says the editor-in-chief Jože Biščak.

Wicked capitalism, as opposition Left leader Luka Mesec termed it, is apparently also reflected in social inequality measured by wealth.

Since we are not as far as redistributing it by looting, Mesec is reciting his mantra of "fair taxation" under which the rich should pay more.

It is of course typical of socialists to fight against capitalism with other people's money, which defies the logic of market economy.

But the statistically-corroborated fact is that never in the world have so few people lived under the poverty threshold and have goods been more available to everyone.

"And the credit goes solely to the rich, who play the role of 'food tasters in royal courts'," the magazine's editor-in-chief says in the eponymous commentary.

They can be credited with having been able to afford a terribly expensive innovation such as a TV set or a mobile phone at a certain moment in history, and their response enabled producers to assess the future demand.

Them being pioneer consumers benefits all, making goods more accessible also for the poorer classes. "So eventually, if I use the speak of the leftists, this helps reduce social inequality," Biščak concludes.

All our posts in this series are here

09 Jan 2020, 15:20 PM

STA, 8 January 2020 - Slovenia's Financial Administration (FURS) collected EUR 17.6 billion in taxes in 2019, which is by EUR 954 million or 5.7% more than in 2018, its early figures show.

The trend has been present ever since FURS was set up with the merger of the national tax and customs administrations in 2014. Since then its tax collection rose by 29%.

Last year all public budgets - the national budget as well as the municipal, pension and health budgets - posted rises in revenue, with excise duties being one of few major taxes the collection of which dropped (-1.1%).

Social security contributions collected - which provide for pension, disability and health insurance and are largely paid directly to the public pension and health funds, but some also to the national budget - increased by 7.2% to over EUR 7 billion.

FURS also collected by 9.4% more taxes on income and profit; a significant rise of 5.9% was recorded in personal income tax, while corporate tax collected rose by 17%.

The VAT take increased by 2.8%.

FURS pointed out in a press release that last year's 5.7% rise in taxes it collected was higher than Slovenia's GDP growth, which reached 2.7% in the first three quarters of the year.

The national revenue service also said that more than 95% of all taxes had been paid voluntarily last year.

It noted another positive trend of a falling tax debt ever since FURS was established. Last year, it dropped by 3.1% to some EUR 1.2 billion, and by 18% since 2014.

All our stories on taxes in Slovenia are here

08 Jan 2020, 09:50 AM

STA, 7 January 2020 - Following some three months of police search, runaway tax debtor Zlatan Kudić was apprehended on New Year's Eve, reportedly in central Ljubljana. One of the biggest tax debtors in the country, Kudić will await the end of his tax fraud trial in detention.

National broadcaster TV Slovenija reported on Tuesday that the Ljubljana District Court, where the trial began in 2013, did not want to reveal when the proceedings will resume since the defence had requested the panel of judges to be excluded, with the court president still deliberating on the issue.

Kudić vanished when the trial was drawing to an end. The former director of the Ljubljana company Maxicon, which went bust in 2012, is standing trial for tax evasion, money laundering and destruction of evidence.

The Financial Administration (FURS) should not hold out much hope of recovering EUR 25 million worth of debt owed by Kudić, said TV Slovenija, since Maxicon was erased from the list of tax debtors upon going into receivership.

FURS could claim the debt via a pecuniary claim in a criminal procedure, but it is questionable whether Kudić formally has any assets left at all.

It is not yet clear where the defendant was hiding from the arrest warrant. His attorney told the public broadcaster that Kudić did spend some time in Slovenia, at least in December.

All our stories about taxes in Slovenia are here

01 Jan 2020, 09:55 AM

STA, 1 January 2020 - Recently adopted tax changes that slightly reduce the taxation of labour in favour of higher taxes on capital officially enter into effect on Wednesday.

The thresholds for all five personal income tax brackets have been increased, effectively subjecting a higher share of income to lower tax rates.

In the second and third tax brackets, which cover mostly the middle class, the tax rate will drop by a percentage point to 26% and 33% respectively.

Those on the minimum wage will see their earnings rise only marginally, while those on average pay can expect roughly EUR 150 more per year.

The threshold for the highest income bracket, which comes with a 50% tax rate, has been slightly raised to EUR 72,000; there are only about 3,900 individuals who fall into this tax bracket, or 0.3% of all income-tax payers.

The income tax changes are coupled with higher capital gains tax, which will rise to 27.5% from 25%. This rate will also apply to rental income.

Additionally, companies will be subject to a minimum corporate income tax rate of 7%, as tax credits for investments and losses from previous years will be reduced.

05 Dec 2019, 11:36 AM

STA, 4 December 2019 - Economist Velimir Bole has assessed that the Slovenian economy is much more resistant to new shocks than it was before the last economic crisis, but that the price for that is a somewhat lower growth. On the other hand, challenges remain when it comes to competitiveness related to a development breakthrough.

At Wednesday's presentation of Outlook 2020, a publication released by the Manager Association, Bole noted that companies and financial institutions had reduced their debt significantly. Households remain among the least indebted in Europe, and the state is under the eurozone average despite a high debt growth.

Overall, Slovenia is almost three times less indebted than the eurozone on average and is less indebted than the economic superpower Germany, he added at the event at the Ljubljana Faculty of Economics, hosted by the newspaper Delo.

According to Bole, indicators in public finances, balance of payments and price competitiveness have improved after the crisis significantly more than in the eurozone as a whole. Macroeconomic stability is much higher than before the crisis and is approximately at the level of Germany.

The resistance of the economy is thus significantly higher, but this does not come without opportunity costs, he said, adding that two of these were slower growth and a higher saving rate.

If there is no major global shock, which cannot be excluded, Bole believes that growth could accelerate again in the third quarter of next year, but one of the main questions is to what extent domestic consumption will be reduced in 2020 due to the slow-down in the manufacturing sector.

Arturo Bris, the director of the International Institute for Management Development (IMD), meanwhile said that despite the higher resistance of the Slovenian economy to a potential crisis, there were challenges regarding competitiveness.

The Lausanne-based institute manages an internationally-recognised economic competitiveness list, on which Slovenia places 37th in overall competitiveness, 32nd in digital competitiveness and 31st in terms of talent.

Bris pointed to what he believes are Slovenia's two major problems - the (in)ability to attract foreign direct investments, with the reason being unfavourable tax policy, and the rigid and restrictive regulation.

Slovenia's rating in both factors is very low, while it is very high in terms of social cohesion and security, he added.

While Slovenia is in a very good position in terms of digital competitiveness, there are two weaknesses - inadequate regulation for development of digital economy and companies not being as ready to introduce technological novelties as citizens.

When it comes to the availability of qualified workforce, Slovenia's problems are the inability to attract foreign talent despite good conditions and high quality of life, and educated and talented young people leaving the country.

According to Bris, the problem in Slovenia is not the framework for competitiveness or fairness of the system, but inefficiencies in the system. One of the problems is businesses distrusting the state, he said, adding that businesses should cooperate with the public sector, as this was the only way for major changes.

He admitted that the observations of Slovenian business executives participating in IMD surveys did not necessarily always reflect the reality. This is a problem and this gap needs to be closed, otherwise the country's reputation will be worse than it actually should be, he added.

17 Oct 2019, 09:33 AM

STA, 17 October 2019 - The parliamentary Finance Committee has finalised a package of tax bills that slightly reduce the taxation of labour in favour of higher taxes on capital, after adopting last-minute amendments to counter criticism that the legislation amounted to a generous handout to the rich.

Under the legislative package confirmed last evening and slated for passage at the National Assembly plenary next week, the thresholds for all five brackets will be slightly increased and the general tax credit will rise.

In the second and third tax brackets, which cover mostly the middle class, the tax rate will drop by a percentage point.

Those on the minimum wage will see their earnings rise only marginally, while those on average pay can expect roughly EUR 150 more per year.

The original government proposal also involved a significant tax cut for the richest, as the threshold for when the highest, 50% tax rate kicks, was to rise by over EUR 9,000 to EUR 80,000.

Bud amidst criticism, especially by the opposition Left, that this amounted to a generous handout to the richest, the committee set the threshold at EUR 72,000, about a thousand euro higher than now.

There are only about 3,900 individuals who fall into this tax bracket, or 0.3% of all income tax payers.

The income tax changes are coupled with higher capital gains tax, which will rise to 27.5% from 25%. This rate will also apply to rental income.

Additionally, companies will be subject to a minimum corporate income tax rate of 7%, as tax credits for investments and losses from previous years will be reduced.

The committee debate saw parties clash on taxes along ideological lines.

The Left unsuccessfully sought to withdraw the income tax changes altogether, arguing that the legislation would create a huge budget shortfall while doing too little to benefit the poorest.

The centre-right opposition, on the other hand, came up with amendments that would reduce the taxation of capital and accused the Left of "trying to banish managers out of the country", as New Slovenia (NSi) MP Jožef Horvat put it.

All opposition amendments were voted down.

And even an MP of the coalition, businessman Marko Bandelli of the Alenka Bratušek Party (SAB), wondered why the Left hated people with high pay "who push our country forward".

Robert Pavšič of the ruling Marjan Šarec List (LMŠ) countered that the government was heeding warnings by international organisations that labour is too heavily taxed and capital too little.

"The underlying purpose is to provide greater tax equality," he said.

The government had originally proposed a much more far-reaching tax reform package but the bills, first presented in February, got watered down due to GDP growth data and forecasts showing that economic growth is cooling down.

03 Oct 2019, 17:32 PM

STA, 3 October 2019 - The government confirmed on Thursday a package of tax tweaks that are meant to reduce taxes on labour to increase competitiveness. The list includes increased general tax credit and changes to the income tax brackets to reduce the tax burden on the middle class. On the other hand, the taxation of capital gains and rental income is to rise slightly.

 The changes, which the government wants passed in fast-track procedure so they can enter into force with the start of 2020, affect laws on personal income tax, corporate income tax and on tax on profit from disposal of derivatives.

Speaking of a "new step towards tax optimisation", the government said that the "proposed measure will additionally reduce the burdens on labour, whereby we are strengthening competitiveness, preserving a stable economy and contributing to sustainable economic growth".

In general, the changes are designed to increase take-home pay, which will be achieved with a higher general tax credit that all taxpayers are entitled to, by EUR 200 to EUR 3,500.

In an effort to reduce the tax burden on the middle class, the tax rate will fall by one percentage point both in the second and third brackets, to 26% and 33%, respectively.

02 Oct 2019, 12:18 PM

STA, 1 October 2019 - A group of 32 MPs has requested that the Constitutional Court review the property mass valuation act. The request, distributed to the press on Tuesday by the opposition New Slovenia (NSi), says that the valuation models used for the estimates, set to serve as basis for a property tax, should have been closely defined by the act.

The models are key in determining the taxpayers' position and must thus be prescribed by the law and not by executive acts, the review request says.

The issues found unconstitutional by the Constitutional Court in 2013 still remain after the act was changed in May 2019, the request says.

The court found in 2013 that the act failed to define individual valuation models and the application of models in value estimated of different types of real estate.

The act also failed to define "actual use of buildings or parts of buildings" and did not define individual types of actual use, the request notes.

The NSi has called a press conference for tomorrow, featuring MP Iva Dimic and the NSi's farmers' branch head Janez Beja.

One of the points in the request says that the valuation system has been set up in a way that will force farmers to sell agricultural land whose purpose is classified as building land.

The act envisages that the value of this type of land be estimated based on classification by purpose, rather than actual use, which would lead to higher taxes. The request says that this will force farmers to sell the land, and to development of agricultural land.

Meanwhile, the Mapping and Surveying Authority (Geodetska uprava Republike Slovenije – GURS) released today preliminary results of mass valuation of property. The results could be used for a number of purposes, including a real estate tax.

However, Prime Minister Marjan Šarec told the MPs in a Q&A today that the government, "in its current constellation is not capable of passing a real estate tax".

27 Sep 2019, 10:47 AM

STA, 27 September 2019 - While the Financial Administration (FURS) has just highlighted the continuing positive trend in the recovery of tax debt, it is bound to have a hard time recovering what are EUR 25 million owed by one of the biggest tax debtors in the country. Zlatan Kudić reportedly disappeared as a tax fraud trial against him was about to end.

According to Thursday's report by public broadcaster TV Slovenija, the former director of the Ljubljana company Maxicon, which went into receivership in 2012, has had an arrest warrant issued against him.

Kudić was undergoing a trial, along with two co-defendants, for tax evasion, money laundering and destruction of evidence.

The court ordered that he be detained when he stopped attending trial a few weeks ago and the police issued an arrest warrant, but so far to no avail.

According to TV Slovenija, Kudić and Maxicon have been erased from the list of tax debtors with the company's termination, but FURS could theoretically still go after the debt via a pecuniary claim in a criminal procedure.

The question, however, is whether Kudić will ever again be available to Slovenian courts and whether he officially has any assets at all, the report added.

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