On this week’s episode of the show Signal, the guest was tax expert Ivan Simič. He and the presenter, Zala Tomašič, devoted the show to the topic of taxes and tax legislation, clarifying a number of concepts and issues that are clear to the tax expert but which he feels are not clear to the Golob government.
Regarding contributions, tax expert Ivan Simič sees no problem with higher contributions, as he believes that their intention is correct. However, what he pointed out as problematic is the amount of the progression of 50 guaranteed over the 74,160-euro tax base, which, in his opinion, is quite high, especially compared to Croatia, which has a maximum of 30 guaranteed, or Serbia, which has 10 achieved during the year, and later the amount is adjusted according to income, but the maximum is 25.
We also do not have a cap on social contributions, which would ensure that social contributions are only levied up to a certain amount. This exists for sole traders, so Simič sees no reason why it should not be introduced for others. Slovenia’s taxation is the most comparable in Europe to Austria, but in general, they have 11,000, while we have 5,000.
So contributions are – taxes?
Contributions are taxes, he said, but as he explained in his introduction, social contributions have a clear purpose, aimed at human needs. “The state had certain needs, and when it had those needs, it started thinking about how to introduce and tax something,” he explained, using the example of what exactly happened recently when the tax change on travel expenses came into force.
Under the government of Janez Janša, an income tax law was adopted, which was then repealed by the current government of Robert Golob. Simič explained that one of the changes was the general allowance, which was set to increase by 1,000 euros every year, while the other change reduced taxation from 25 to 15. “From the base of the general allowance, taxpayers received more, but then came the Golob government, which set out to reverse everything that the Janša government had done, even if it was good,” he stressed. Simič said that tax reform is not an easy job, and he speaks from experience, having been involved in four of them himself.
The law will also be felt by athletes
Simič doubts that tax reform is being implemented, instead, we are only getting some tax changes, including the infamous law on sole proprietors with a flat-rate taxation, introduced by the Minister of Finance, Klemen Boštjančič. “The law will affect quite a lot of people, including athletes, and it will mean more taxation for clubs,” he explained.
On the alignment of the income tax scale with inflation, he said he has seen a lot of criticism about the abolition of indexation. He noted that in tax matters, he is in favour of simple and round numbers and that indexation makes the matter more complicated. “But I agree that indexation should be done every so often, maybe every five years, but it doesn’t have to happen every year,” he said.
The government needs to watch what it says
Before the 2022 elections to the National Assembly, there had been a lot of talk about property tax, with Simič pointing out that he does not understand why the government is talking like this, “why should those who are hard-working and have built houses, in which they have invested their own money, have to pay tax because they have houses; but those who decide not to build a house but to rent an apartment, and have money in the bank will not have to pay anything.” If the government is talking about wealth, he said, that should be all “wealth”, but the line between what is wealth and what is worth is fast blurring.
“I don’t think this government, from what I’ve seen, is capable of introducing a wealth or property tax because of the uproar it will cause with people,” said Simič, who thinks it should have been done differently. As for the statement about taxing “the richest”, he said that “whoever said that has shown that he or she has no idea.” He also said that we should first define who the “rich” are and come to terms with the fact that it is actually those who have earned a lot who have also paid a lot on a progressive scale of 50 percent. He believes that this is quite unfair and that it is intended to portray these people as those who have “cheated”, but even if that were the case, it should be dealt with by the relevant institutions. Simič then went on to explain how many of these people there are, how much income tax they actually pay, and what his proposal was, in terms of taxing those who earn the most.
What about tax havens?
In the second part of the show, the two interlocutors discussed tax havens, which the guest defined as areas with extremely low taxation. As an example, he pointed to Panama, which has one tax rate – 30 percent – for its companies established and operating in Panama, while “companies that are established in Panama but commit not to do business there have zero tax,” said Simič, who said that things have changed in recent years and that “it’s harder to hide things.” He went on to explain what exactly constitutes tax residency and what has to be given up, as well as the impact of marital status. “It’s not that simple, and people take it too lightly.”
From a tax point of view, Simič would reduce the progression of income tax in Slovenia to somewhere around 40 percent or less, he would adjust the lower brackets, and he would increase the general deduction, which he has proposed in the past. “By raising the general allowance, we are eliminating a large number of low-income taxpayers who would not pay any income tax, perhaps preventing people from moving abroad,” he said, adding that he would also make some changes in the area of rental taxation and would not restrict people in terms of short-term rentals through Booking, as “it’s all our taxpayers’ income and our taxes.” In terms of corporation tax, he is in favour of a 15 percent rate rather than the current 22 percent, which he says was planned under Andrej Bajuk‘s ministry.
High taxes are the result of high spending
But taxes are rising all the time, which, according to the tax expert, is the result of overspending. “Because someone spends money, they don’t think about the “how,” there is no real control, and even if something happens, no one is held accountable. I once suggested that anyone who wants to be a minister should deposit 100,000 euros in the bank, and if his final score ends up not being more than three – if it is lower than three, the money should stay in the budget,” Simič was clear, who believes that despite everything that was clarified on the show, there will be no changes. He argues that the current government has the power to change everything, including making things easier, especially for pensioners, and he also touched on the taxation of student work, which he believes is the result of the exploitation of student work.
As for Golob’s optimistic announcements that they will adopt a tax reform that will change Slovenia, Simič said that these statements put him in a good mood “because I know they won’t do it because they haven’t done anything concrete so far.” Simič said that so far, they have gotten everything wrong, “everything they promised last year – the finance minister and the prime minister, what kind of reform they will do and what kind of team they will form,” but in fact, “they have no idea” about the issues. Tax reform, he argues, is a matter that requires good organisation, which is not exactly a skill this government possesses. People will feel the changes introduced this year during the year, and then at the end of the year, when next year’s income tax returns come in.
T. B.
