Slovenia’s tax burden on wages is one of the highest in the world, and the Golob government, in its quest for taxpayers’ euros, wants to burden the wages even further, as we have already reported. The Slovenian taxpayer has been persuaded by the left that this is the only way forward. That, otherwise, a welfare state is practically impossible. And that without these taxes, people would be dying in the streets and gangs would be killing unsuspecting citizens out in the open. But there is another way.
The Slovenian income tax scale (especially after the repeal of Janša‘s income tax reform) is strongly egalitarian, according to the wishes of the Left party (Levica), which leads the government’s ideology.
They seem to want to achieve a kind of wage parity, where most people will earn only a shade more than the minimum wage – such a tax environment is, of course, destructive for innovation, the competitiveness of the Slovenian economy, and fair pay for the most able. No Slovenian IT worker will work for 3,000 euros in Slovenia if he or she can earn 1,000 euros more in Switzerland or Austria on the same gross salary, thanks to the cap on social contributions.
As we have already reported, the government plans to further tighten the already egalitarian wage tax. The 50 percent tax threshold on labour costs is to be lowered from the current wage of 5,760 euros gross to just 4,540 euros gross. In other words: if you want to earn just over 2,000 euros net, you will have to donate practically the same amount to the Central Committee of the Union of Communists on Gregorčičeva Street, where your donation will be happily used to fund “anarcho-left” NGOs and the self-employed in culture. Such an arrangement would, of course, be completely unsustainable, but the current government has the chance to get it over the parliamentary threshold with its vote steamroller.
Compared to China, Slovenia is a true (backward) communist country
But there is another way. The “communist” People’s Republic of China, for example, has an income tax that many of the European countries could envy, and Slovenia is pure communism by comparison.
China’s income tax scale is as follows (depending on the daily exchange rate of the RMB-euro):
– Up to approximately 1500 euros of monthly salary, the tax is 10 percent – Up to approximately 3200 euros of monthly salary, the tax is 20 percent – Up to approximately 4500 euros of monthly salary, the tax is 25 percent – Up to approximately 7000 euros of monthly salary, the tax is 30 percent – Up to approximately 10,000 euros of monthly salary, the tax is 35 percent – Above approximately 10,000 euros of monthly salary, the tax is 45 percent
That is to say, even the last income tax bracket does not reach our “rich,” who are earning 4,540 euros a month, but in practice, this means that a worker in communist (in reality turbo-capitalist) China, especially in those key “engineering” salary ranges of 4,500 to 7,000 euros, can earn thousands of euros more on the same net salary than in Slovenia. Chinese tech companies would otherwise find it extremely difficult to retain the capable engineers and programmers that US Silicon Valley companies are luring in with hefty offers. It should be noted that the special economic zones (Shenzhen, Shanghai, Fujian, Zhuhai, Chengdu, Chongqing and other important cities) have their own special tax regimes, which can be even more favourable than those imposed by the central government in Beijing.
These special economic zones are the engine of the Chinese economy, as they operate under their own even more economically liberal tax rules. They have created a flood of high-tech companies, created millions of new jobs and single-handedly lifted 500 million people out of poverty.
Slovenia is moving towards egalitarianism
Slovenia, however, is heading in the opposite direction. In the direction of egalitarianism, punishing above-averageness and rewarding below-averageness. Slovenia is currently ranked fifth in the – already over-taxed – European Union in terms of the level of wage tax: only Belgium, Germany, Italy, Austria and France are ahead of us, and this does not even take into account the “gifts” that the Golob government is preparing for us until 2026 (lowering the threshold for the highest income tax bracket, increasing the employers’ contribution, the compulsory long-term care contribution, …).
The US collects significantly less in taxes from the pension, disability, health and other social security programmes – namely, 24 percent of total tax revenues – than the average of 29 percent in the 37 other OECD countries. Some countries, including Slovenia, were well above this average: the Czech Republic, Japan, Slovakia and Slovenia each collected more than 40 percent of their revenues from social security contributions. The OECD has therefore been warning Slovenia for years that the wage burden is simply too high and that it is seriously undermining the competitiveness of the Slovenian economy. Even more frightening, Slovenia’s marginal income tax rate on wages is also at a global record high, according to the OECD’s 2018 benchmarks.
It is important to note that we are the first “poor” country with such a high wage burden. All the other countries ahead of us are core European countries with perfectly regulated public service systems. In exchange for high taxes, Slovenians get to die while waiting to see a doctor, poor administrative services, dysfunctional public transport and kilometres-long traffic jams on the motorways outside Ljubljana.
Slovenia’s problem, then, is not just egalitarianism, which is the result of budgetary gluttony. The problem is also that the budget is unable to offer the competitive services we deserve in return. That is why nobody in Scandinavia complains about high taxes (which are lower than in Slovenia anyway), because in return, they get a functioning state. Meanwhile, in return for fiscal repression, we get a billion for NGOs so that various peace institutes can, among other things, research the subaltern in Rwanda. We would rather have a third lane on the highways, a working railway, and the fulfilled promise of having to only wait 30 days to see a specialist.
Mitja Iršič
