Chief Govt Reformer Urges Swift Action on Structural Reform

Ljubljana, 6 September

The chair of the government reform group, economist Joze P. Damijan, has said the cornerstone of the group's proposal, to be unveiled at the end of the month, will be flat tax and privatisation of state-owned companies.

Slovenia has to carry out structural reforms, and it better be one of the first European countries to do so than one of the last ones, he stressed in a speech to the Chamber of Commerce (GZS) on Tuesday.
According to Damijan, the reform proposal will include a flat tax rate for personal and corporate income tax and VAT. However, he stressed, the reform must be carried out correctly if it is not to create greater social inequality.
"Our proposal will create greater social equality, greater transparency and cut red tape, as well as the exclude social objectives from the tax system," he said.
This will reduce the tax wedge, which he says is "disastrously high." This has to change, or else we will have soaring numbers of the unemployed, he thought.
Damijan also sees tax reform as a means of increasing investment in research and development: the flat tax, coupled with the announced elimination of the payroll tax, would save the companies a combined SIT 117bn (EUR 488) a year.
As for the state's withdrawal from companies by selling the state-owned stakes, the reform working group will propose that state-owned companies be privatised and the Pension Fund management (KAD) and Restitution Fund (SOD) disinvest.
However, he pointed out, proposals for privatisation may not come from the authorities; they have to be launched bottom-up. To do that, expert privatisation commissions must be set up to draft privatisation programmes in conjunction with management boards.
Considering the pension projections, people will have to work until age 70 to survive. "The only factor that can help us is knowledge," he said.

Chief Govt Reformer Urges Swift Action on Structural Reform

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