Home Important Economist Matej Lahovnik about Golob’s “upside-down income tax reform”: “Pure populism!”

Economist Matej Lahovnik about Golob’s “upside-down income tax reform”: “Pure populism!”

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Dr Matej Lahovnik (Photo: STA)

By: Sara Rančigaj / Nova24tv

The economy welcomed with great approval the amendment to the Personal Income Tax Act, which allows employees higher net salaries, as Slovenia is extremely highly taxed in the field of income, which is also pointed out by the OECD. A Slovenian worker receives a much lower net salary at the same gross salary as in Austria. “Therefore, it is logical that the government has implemented such a personal income tax ‘mini’ reform, because in this way it prevents young professionals from going abroad,” explained economist Matej Lahovnik. Golob, on the other hand, said in a 24ur confrontation last night that he would turn income tax reform upside down, as he would tax the poorer less and the rich even more. “In fact, this is just plain populism, which is the path to equality of poverty for all, because simply the best people will emigrate even more from Slovenia, because no one will agree to the state taking away more than half of their gross wages,” Lahovnik was critical of Golob.

The OECD reminds us of Slovenia’s problem that wages are overburdened with taxes. “The OECD also wrote as a guide to Slovenia: if we want to maintain a constant favourable economic trend, we must continue with structural reforms, and in the field of taxes we must relieve the burden on work,” said economist Dr Matej Lahovnik.

All empirical analyses show that a very big problem in our country is high progressive taxation of labour, which means that with the increase in gross wages, the average and marginal average tax rates also increase sharply. “Taxation is rising sharply. That is why we have one of the major development problems in Slovenia, that a worker in Slovenia receives a significantly lower net salary at the same gross salary as in Austria,” he explained.

In other words, if an entrepreneur wants to hire a development engineer or IT specialist on the world market and give him a certain expected income, which he always expects in net amount, because he is interested in what he will get on his account, the company in Slovenia will have to pay significantly higher gross salary as a company in Austria. “Therefore, it is logical that the government has implemented such a personal income tax ‘mini’ reform, because in this way it prevents young professionals from going abroad,” he explained.

The low educated come, the highly educated leave

Demographic trends also point to the great challenge of Slovenia, that people with a very low level of education or even no education immigrate to our country, and those who are most educated go abroad. “Also, because we have a very unstimulating tax system for people who are educated and who create, because of course they are interested in their net salary, not gross,” he estimated. In addition to his already extremely high salary, President of the Gibanje Svoboda party Dr Robert Golob emphasises that he does not need an additional thousand euros to continue living in Slovenia, but such cases are rare.

According to Golob, those with lower incomes need more than an additional thirteen or 20 euros more than the amendment to the Personal Income Tax Act will allow. “That is why this personal income tax reform is wrong, because it needs to be turned upside down. Give to those who do not have, and these are those who have the minimum wage, the average, and youth, so that they will be able to create a home. And to take from those who, I am very sorry, have,” said Golob.

Burger: We are over-taxed at above-average incomes

Professor at the Ljubljana Faculty of Social Sciences and economist Dr Anže Burger says that raising the general relief is the most expensive form of income tax relief, but the latter needs to be relieved in Slovenia. “However, we are over-taxed at above-average incomes and not at lower incomes. It would therefore make more sense to move the class boundaries to higher marginal tax rates or even eliminate the 50% income tax rate,” he explained.

According to Lahovnik, the government has taken the right step with the income tax reform. While the KUL coalition advocates even greater taxation of wages, in his opinion this path leads to full income equality, because it will slowly become irrelevant how much an individual earns in gross amount, because with a very progressive income tax system net amounts will be very close. They will greatly increase the difference between how much an individual company costs and how much an individual gets on their account. “In fact, this is just plain populism, which is the path to equality of poverty for all, because simply the best people will emigrate even more from Slovenia, because no one will agree to the state taking away more than half of their gross wages,” he was critical.

KUL and Gibanje Svoboda party would like to take as much as possible from the workers

SD expert Milan M. Cvikl speaks in confrontations in the sense that the state is throwing away money with this relief, but in fact it is taking only a little less from those who also earned that money. The essential difference is in the concept that it takes a little less from those who also earn money, because the government assumes that they know how to manage it better. “The concept of KUL members and the Gibanje Svoboda party is obviously that those who earn money should be taken as much as possible, because the state knows how to better manage and distribute the money of these creative people better than these people themselves,” he added.

Lahovnik believes that this is the path to equality in poverty and is contrary to everything that the OECD reminds us, and that is that we need to relieve wages, introduce a social cap and, of course, that the biggest problem is the high tax burden with contributions higher gross wages, because in fact many engineers and experts emigrate from Slovenia and go abroad. “In the public sector, we then have this phenomenon that many, due to such high taxation, then flee to the afternoon IC and into self-employment,” he concluded.

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