Government plans to raise threshold of income tax for upper middle class

Bill to come into effect next year

The amendment bill would lift the threshold between the second and the third category of taxpayers from the current EUR 18,960.28 net tax base to 20,400 for the years 2016 and 2017. Foto: Reuters

At a correspondence session the government has passed a bill that amends the Public Finance Balance Act by easing income tax burden on the third category of taxpayers, i.e. middle to upper middle class, for two years.

The amendment bill, which the government has submitted to the national assembly as an urgent procedure, would lift the threshold between the second and the third category of taxpayers from the current EUR 18,960.28 net tax base to 20,400 for the years 2016 and 2017. The fourth, top category, taxed at 50% for the net annual tax base above 70,907.20 remains unchanged. The proposal of a mini tax reform, drafted by Finance Minister Dušan Mramor, also did not plan to abolish the fourth category, yet due to opposition from the business sector and employers the draft was later revoked.

As the reason for the amendment, the government cited data from the European Commission that Slovenia is below EU’s average in terms of tax burdens and contributions, but the economic structure of taxes in fairly inappropriate and hinders competition.

“The amendment proposal eases the burden for taxpayers whose net annual tax base is above EUR 18,960.28, which is approximately an income that is 1.5 times higher than the average salary,” explained the government.