Minister of Finance, Klemen Boštjančič, is announcing a thorough tax reform, which will – instead of relieving people – tighten the tax noose even further. People have already stopped dancing since the end of April. They are practically dizzy from all the bills, the general raising of all prices, and now the government will also burden them with new taxes.
According to the statements of the government representatives, they intend to completely abolish the option of being a sole proprietor with normalised expenses and introduce higher taxes for real estate, corporate profits and consumption. At the same time, Boštjančič also said that they want to lower the wage tax, but when it comes to this question, the government is clearly contradicting itself, as Minister Boštjančič also explained how they are already looking for ways to repeal the amendment to the Income Tax Act, which was adopted by the Janez Janša coalition – which does just that, it cuts the wage tax.
Boštjančič also claimed that with these actions, he would be following the proposal of the Organisation for Economic Co-operation and Development, but according to the OECD’s suggestion, labour taxes must be reduced even further than the previous government reduced them, while Golob’s government even wants to cancel this year’s long-awaited tax relief. On the other hand, they will support the OECD measures that they like – they plan to increase the retirement age to 67 years. Of course, for professional readers of newspapers and coffee drinkers who are working at most of the ministries, even 75 years would not be too high a retirement age. Meanwhile, ordinary workers in factories are already completely burned out after turning 60, and it is already very difficult for them to reach their well-deserved retirement without physical deformities that prevent them from living a normal life.
Boštjančič also said that the government would very likely prepare a much broader tax reform than they originally thought, and it will be prepared for discussion within the coalition in the fall. He said that with the reform, they want to resolve the anomalies that have accumulated in the past 20 years due to what he said are powerful lobby groups – and they want to do it as soon as possible. And he believes that sole proprietors with normalised expenses are one of these anomalies.
Unfortunately, the economic illiterates in the government are not at a level where they could analyse the consequences of such a measure. The Slovenian economy is extremely specific, with extremely high taxes on labour, and until now, the sole proprietors with normalised expenses have basically represented the bypasses on which the entire economy rests. This is about the last remains of the libertarian economy in Slovenia, which the government wants to destroy – together with the favourable taxes on the profits of legal entities that we have now – in the name of social regulation within rigid wage systems.
There is a high probability that these actions will result in a quick spread of the grey economy, as we knew it in the late 1980 and early 1990s. The state budget will not be any richer for it, but the people will be even poorer, and they will also have to deal with financial bypasses, trying to figure out how to escape the insatiable tax wolf instead of working on their businesses.
Lower taxes for a healthier budget
Minister Boštjančič also ironically added that the priority of this government is to raise productivity – but it is very difficult to understand how our socialist government imagines it could raise productivity by raising taxes. The Janša government’s income tax reform proved that lowering taxes also has a beneficial effect on the budget – even though trade unions and left-wing politicians jointly warned of an 800 million budget hole, the tax treasury actually got 50 million euros more.
Real estate taxation interferes with the very core of the Slovenian way of life. Slovenians invest all our savings in real estate. We build houses for our children and grandchildren, we build holiday houses… But not because we are rich. Because we give up many other things, in order to be able to buy cement and bricks. The tradition of working hard and by yourself has been alive in our country since the times of communist shortages when colleagues and neighbours helped each other build houses. Family houses are a kind of whole-family projects, which is not something that is common abroad, even though our officials like to use foreign countries as an example of real estate taxation.
With our hands and Eastern European salaries, Slovenian people are creating a Western European life by creating real estate for ourselves. And now the socialist government wants to attack this as well. Let’s not forget that we already have to pay tax for the building land. And this would be yet another tax for those – as the inciting Minister Luka Mesec would say – who managed to get their claws into enough real estate for themselves. And after all, in the long run, this is basically nationalisation – even a 0.1 percent tax would ultimately mean that the state will inherit the property sooner rather than later if the owner cannot afford to pay additional taxes for it.
Apparently, the quiet implementation of the political programme of the Left party (Levica) has now begun – the gradual elimination of property rights and private entrepreneurship. This is hard socialism with a (media) smile on the officials’ faces. Hold on to your wallets.
Andrej Žitnik
