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Monday, February 6, 2023

Golob’s coalition passed the Income Tax Act, which will lower everyone’s wages

By: Gal Kovač / Nova24TV

The coalition MPs have finally fulfilled their promise. A day after the referendum, in which the voters decided to reduce the scope of long-term care rights for the elderly, establish consensus on RTV, and become European champions in terms of the number of departmental ministries, the members of the Gibanje Svoboda, SD, and Levica parties decided to cut everyone’s salaries. SDS spoke out against interference in taxpayers’ wallets, NSi abstained from voting.

Robert Golob’s government will hit the taxpayers on the fingers in several places. The planned increase of the special general relief, which was planned by the government of Janez Janša, will not be increased to 5,500 euros on January 1st, as was planned, but only to 5,000 euros. Further increases of up to 7,500 by 2025 have also been eliminated. The tax rate in the fifth income tax bracket returns to 50 percent instead of the 45 percent set by the government of Janez Janša.

The government’s original proposal was also to specifically tax self-employed entrepreneurs, “with normalised expenses”. At the outset, the government’s proposal stipulated that taxpayers who have at least one person compulsorily insured for a full-time work period of at least nine months will be recognised for normalised expenses up to a turnover limit of 35 thousand euros. This then rose to 50,000 euros in turnover, so that recognised standardised expenses were reduced from 80 to 40 percent.

Golob will also hit the fingers of those who have income from renting out apartments. The rate of income tax payable on income derived from renting out property was set at 15 percent. It will now rise to 25 percent. SDS MPs, among them Jožef Lenart, explicitly stated in this article that rents will rise as a result, because landlords will pass on the increased cost to tenants. Another possibility is, of course, an increase in the scope of the grey economy, with which landlords and tenants will try to circumvent the increased scope of taxation.

The law brings a new relief for dependent family members and a relief for young people. The latter reduces the tax base from employment income by 1,300 euros for taxpayers up to the age of 29.

A blow to the successful

Taxation of payments for business success is returning to the level before the amendment to the Income Tax Act, which was adopted by the government of Janez Janša. According to the new (old) scheme, payments will be exempt from the tax base, but only up to the level of the average Slovenian salary. The option to include income from renting out property in the annual tax base has also been removed, and compensation payments for using one’s own funds for work at home will also be exempt from this.

Shareholders, beware!

The government of Robert Golob will not interfere with the level of taxation of capital gains for the time being, it has re-introduced the taxation of the paid-out value of stocks or shares in the event of their disposal as part of the acquisition of own shares.

They did not file a referendum in NSi

SDS MPs rejected the bill. They were mainly opposed to the suspension of the increase in the general allowance and the general reduction of net wages. An initiative for a referendum was also submitted to the National Assembly at an extraordinary session in November. The members of the National Assembly decided on this initiative on Friday and rejected it. NSi also announced the referendum, but they changed their mind in the end. In the final vote, they abstained and did not vote, even though the proposed law was probably their biggest success in the previous coalition.

You can read more about the general impoverishment of the Slovenian taxpayer, about which we have written a lot in the past months, in the article [Calculated] This is how much your salary will be lower because of Robert Golob’s government – even those with the lowest salaries will not escape this! The law also in a general sense distances Slovenia from the core countries of Europe and the ethos that drives it. In developed countries, there is a consensus that wealth is created only by the private sector, which needs to be facilitated for this reason, and at the same time it is essential that the state creates incentives for greater productivity. In laymen terms, it needs to pay off for employees to work more, so that they are left with a larger part of their earned income. With the government of Robert Golob, Slovenia is, on the contrary, returning to the spiritual space of the East, where the prevailing opinion is that the state knows better than the individual. Hundreds of historical examples testify to the fact that this is an extremely bad development strategy.

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