Chief Govt Reformist Says Reforms Should Not Be Rushed

Ljubljana, 20 September

Economist Joze P. Damijan, the head of the government's reform committee, believes the reforms that his group will draft should not be rushed, or else the government risks creating a "cock-up" similar to that caused by the previous government with its reform package.

Speaking at the 12th Stock Market Focus conference in Ljubljana on Monday, Damijan said that the reform package is unlikely to enter into force in 2006. If all legislative solutions are adopted, enactment is possible in 2007.
Damijan is confident that the reforms, which are to be drafted by 30 September, will be enacted and carried through, for the public as well as the corporate sector expect that. "The genie has been released out of the bottle, and there is no way of getting it back in."
The purpose of the reform package is not to attract foreign investors, but to enable Slovenian companies to realise their potential, said Damijan, who was reluctant to talk about the content of the reforms until the package is finalised.
He also said that his group would take into account most proposals put forward by the working group for tax reform chaired by economist Marko Kranjec. "Good proposals need to be considered," he stressed.
Damijan noted, however, that he labelled as asocial only the part of the proposal that refers to a reduction of tax brackets. This would reduce the tax rate for high-income brackets only, whereas gross wages for the lowest brackets would have to increase to remain unchanged in net terms.
He therefore embarked on renewed advocacy of the flat tax rate, saying that the system is much simpler. Yet in order not to create major social differences, net wages should remain unchanged, which would lower labour costs and improve productivity.
Kranjec disagreed, saying that fixing wages would have negative inflation and cost impact on the economy. He acknowledged that the flat tax option should be studied, but decried the fixing of wages.
Damijan concluded by saying that the flat tax is the system of the future. Industries with a highly educated labour force are the future, but you cannot be competitive with progressive taxation, he thought.
According to him, the European economy must stay ahead of its Asian rivals, which requires low expenses so that companies can employ highly qualified staff.

Chief Govt Reformist Says Reforms Should Not Be Rushed

More articles from this issue:

Archive