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Slovenia: Real Estate Tax Wobbles

Published: October 22, 2013; 20:54 · (Vindobona)

The ruling parties could not agree on a common standpoint yet. The controversial real estate tax may fail.

Slovenia: Real Estate Tax Wobbles / Picture: © Vindobona.org

Due to its severe financial situation, Slovenia´s government is looking for new revenues. The property tax may bring about € 350m for the ailing country. This corresponds to 1.1% of the country´s GDP. According to Minister of Finance Uros Cufer, the tax rate will range between 0.07% and 0.75% of the property value.

Initially, the Slovenian Parliament should officially approve the government´s proposal in November. However, the coalition parties could not agree on a common position yet. The governing pensioner´s party (DeSUS) announced that the real estate tax will not be supported as proposed. What is more, the ruling Citizens´ List (DL) wants to defuse the planned tax. DL proposes to cut public expenses instead. The coalition partner DeSUS rejects DL´s proposal, though. According to DeSUS, further austerity cuts are inacceptable.

Slovenia´s opposition is against the property tax anyway. Taxing agricultural land, farms and forests would cause a collapse of the Slovenian agricultural sector, the oppositional Democrats (SDS) underlined. Robert Horvat (SDS) explained that agricultural land must be used to produce food. “Our land must not be subject of fiscal problems.”

This year, Slovenia´s budget shortfall will reach about 6.0% of GDP, economists say. Without the aggressive austerity cuts and the radical privatization policy, the budget deficit would be even higher. Next year, Slovenia plans a budget deficit of 3.2% of GDP. Without the tax revenues from the real estate tax, Slovenia´s budget deficit would reach 4.3% of GDP next year.

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