Ljubljana, 10 May (STA) - The government's decision to temporarily ditch plans to introduce a crisis tax and to go ahead with the privatisation of 15 companies was welcomed by participants of a round table debate organised by the American Chamber of Commerce (AmCham) in Ljubljana on Friday.
Director of the Institute for Macroeconomic Analysis and Development (IMAD) Boštjan Vasle said that Slovenia had three options: to do nothing and continue accumulating debt and deficit, cut expenditure, which will in the long-term bring the best results, or deal with taxes.
Yesterday the government decided to raise Value Added Tax (VAT), and introduce a real estate tax as well as several smaller taxes.
While admitting that the VAT raise will initially lower GDP, Vasle said that it would help bring the deficit down in the long-term.
Dean of the Ljubljana Faculty of Economics Dušan Mramor agreed that the problems of the public finances should be tackled with expenditure cuts and taxes.
He believes the government can cut public spending by EUR 300m this year, but that this will entail public sector pay cuts. According to him, the cuts should be 5-7%.
Turning to the revenues side, the economist welcomed the government's decision to scrap the so-called crisis tax for now. Introducing such a tax in the middle of the year would be a wrong move, and raising VAT is much more appropriate for June, according to him.
Co-chair of the AmCham's Tax Committee Barbara Guzina meanwhile commented on the new real estate tax, saying that it not bring much to the state purse.
In the long-run, it is much more important that the existing taxes are collected well and that grey economy is tackled, she said.
AmCham Slovenia president Matej Potokar praised the government's announcement of privatisation of 15 companies. This will enable the state to be more included in globalisation and attract young well-trained professionals into the companies.
While admitting now was not the best time to sell, Potokar said Slovenia had no other alternative. He also pointed out that not all state-owned companies should be sold.
In finance and IT for example foreign investors should be let into the companies, while the state should keep its shares in the infrastructure sector, he believes.