Strategic Council Recommends Flat Tax Rate of 20%

Ljubljana, 20 May

A body advising the government on economic matters has made an official recommendation that Slovenia adopt a flat tax rate of 20%.

Meeting on Friday in Ljubljana, the Strategic Council for Economic Development concluded that Slovenia can afford the flat tax rate in terms of welfare and budget capacities.
According to Joze P. Damijan, a member of the Council, the body decided to recommend a flat tax rate after it reviewed results of a preliminary feasibility study. He said a 20% rate is the most optimal.
The Council believes the flat tax rate should be introduced after Slovenia adopts the euro, expectedly at the beginning of 2007, in order to avoid major economic shocks that could derail the adoption process, Damijan said.
Prime Minister Janez Jansa attended the meeting of the Council. According to Damijan, Jansa supports in principle the idea of a flat tax rate.
"The government will have to decide whether to accept our proposal or not. It should be aware that the tax reform would require that other reforms be undertaken: social security payments, health care, etc," said Damijan.
The study shows that the state stands to lose around SIT 200bn (EUR 834m) in income tax and payroll tax as a consequences of the lower tax rate, Damijan said. However, some of this can be made up with greater tax revenues from VAT, while the state will also save on taxes it has to pay for public sector employees.
According to head of the Council Mico Mrkaic, the flat tax rate would prove conducive for economic growth. "I hope that this proposal will secure wide public backing," he said.
Moreover, Damijan said that the Council would recommend to the group studying the feasibility of a flat tax rate to continue its work so that a final report on the matter could be presented in two to three months.

Strategic Council Recommends Flat Tax Rate of 20%

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