Ljubljana, 16 November 2023 - The draft Act on Reconstruction, Development and Provision of Financial Resources, proposed by the Government of Slovenia, introduces additional burdens that weaken the Slovenian economy and agriculture and their competitiveness, especially in those sectors that are already facing a decline in orders, production cuts, shrinking consumption and redundancies. Therefore, the presidents of the 15 economic and agricultural organisations and associations reject this and all additional burdens announced, because relieving the burden on the economy is key to building a prosperous society, especially in the light of the current global situation.

In addition to national and EU budget, under the current Act on Reconstruction, Development and the Provision of Financial Resources, it would once again be business that would contribute most to the Reconstruction Fund. The solidarity contribution, which was foreseen by the Intervention Act and is an established form of assistance worldwide, was an acceptable form of assistance for employers. Any increase in the levy, without prior thorough analysis and clear and transparent damage assessments, is strongly opposed. We therefore call on all parliamentary groups not to support the proposal sent by the Government to the National Assembly of the Republic of Slovenia and, at least this time, to listen to the warnings and proposals of the business community.

We do not support a 3 percentage point increase in corporation tax between 2024 and 2028. This would further weaken the international competitiveness of Slovenia's export-oriented economy. The outlook for the coming months is worrying, as Germany, Slovenia's largest foreign trade partner, will be in recession and Slovenia is already experiencing a decline in demand from European markets. Exports to the EU-27 fell by 2 % in the first eight months of this year, production by 5 %, Slovenian trade recorded the biggest drop in revenues last month (down 21.5 %) compared to the European average of -2.0 %, consumption is declining and the number of jobs is already falling - 4.000 less people have been employed in manufacturing since the beginning of the year, and the number of employees is also falling in some service industries. In addition, since the inauguration of this government, the economy has been subjected to new and new burdens, from the repeal of the income tax relief of the previous government, to the additional obligations arising from the Labour Relations Act, to the transformation of voluntary health contributions into compulsory ones, higher labour costs, the introduction of new levies to cover long-term care costs, higher excise duties, higher energy prices, the reintroduction of longer employer-paid sickness absence cover, and increased costs for cross-border provision of services or temporary foreign postings. In addition, the economy has already had to pay the extra costs of the ill-considered decision to introduce a public holiday on 14 August this year, and the latest unfortunate solution is the introduction of working time registers, in which companies have already invested considerable resources and some of the requirements of this law are not even feasible for employees. In addition, in view of the bad experience of the past, we doubt that the increase in the VAT rate will actually be temporary.

A strong banking sector is also crucial for the economy. The proposed tax on the balance sheet total of banks and savings banks will have a negative impact on lending activity and the resilience of the banking system. The profits generated by banks contribute to their capital strengthening, as a large share of them remain in banks and savings banks and are therefore not paid out as dividends, thus preserving their ability to lend.

Recovery and reconstruction after floods are complex projects. The approach taken by the Government repeals or amends 21 laws, which requires a multidisciplinary approach, cooperation and dialogue between all stakeholders, and the identification of priority areas. The right direction for the bill is to speed up certain reconstruction procedures, but we believe that in this case it is a missed opportunity if this simplification is not made permanent. Simplification of the procedures for the zoning of buildings is a long-standing demand of the economy, which is already seriously affecting investment decisions in our country.

In addition, we miss the development component of this law. It does list the third development axis as a priority development project, which we absolutely support. However, this is not a new project and therefore cannot be the only development project in this law. Neither is the investment in the 5-G network, or the investment in the Slovenian army, which are not directly related to post-flood reconstruction. We therefore reiterate our call on the decision-makers to clarify the calculation of the damage in the law in a clear and transparent manner, and to include a list of specific projects linked to the reconstruction and a list of projects that are of a development nature, including their financial constructions.

The economic calculations raise concerns about the correct fiscal approach of the government, as they suggest that the proposed increase in the levy could exceed the resources needed to repair the flood-related damage and that the excess funds collected would instead be used to finance the budget deficit. These concerns are compounded by the fact that public debt in the first three quarters of this year was the highest in recent times.

In such a volatile and uncertain international environment, the economy needs a stable tax environment where the rules are known, stable and long-term. We therefore call on the decision-makers to engage in the highest degree of cooperation, dialogue, compromise and thorough reflection before adopting the Act on Reconstruction, Development and Provision of Financial Resources, which will otherwise have long-term negative consequences for the economy, agriculture and, last but not least, for employees.

Alphabetical list of economic and agricultural organisations and associations:

• Advantage Austria Ljubljana

• AmCham Slovenija

• Britansko-slovenska gospodarska zbornica

• Gospodarska zbornica Slovenije

• Kmetijsko gozdarska zbornica Slovenije

• Obrtno podjetniška zbornica Slovenije

• Slovensko-nemška gospodarska zbornica

• Skupina podjetij z notranjim lastništvom

• Trgovinska zbornica Slovenije

• Zadružna zveza Slovenije

• Združenje bank Slovenije

• Združenje delodajalcev Slovenije

• Združenje delodajalcev obrti in podjetnikov Slovenije

• Združenje ekoloških kmetov Zdravo življenje, Sindikat slovenskih kmetov

• Združenje Manager