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OECD Tax Policy Reviews: Slovenia 2018

image of OECD Tax Policy Reviews: Slovenia 2018

This report is part of the OECD Tax Policy Reviews. The Reviews are intended to provide independent, comprehensive and comparative assessments of OECD member and non-member countries’ tax systems as well as concrete recommendations for tax policy reform. By identifying tailored tax policy reform options, the objective of the Reviews is to enhance the design of existing tax policies and to support the adoption of new reforms.

This report provides a comprehensive tax policy assessment of the taxes paid by individuals in Slovenia as well as tax reform recommendations. The report is divided into six chapters, with a summary of the main findings upfront, followed by more detailed recommendations at the end of chapters 3 to 6.  Chapter 1 sets the scene for tax reform in Slovenia. Chapter 2 focuses on the labour market, social policy and tax policy related challenges. The ensuing chapters assess the financing of the social security system (Chapter 3), identify strategies to strengthen the design of personal income tax (Chapter 4), indirect taxes (Chapter 5), and the taxation of capital income at the individual level (Chapter 6).

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Main findings

A well-designed personal income tax (PIT) is the cornerstone of a tax system that can effectively produce inclusive economic growth. Slovenia needs a comprehensive tax reform that shifts the tax mix from employee social security contributions (SSCs) to PIT, value-added tax (VAT) and recurrent taxes on immovable property. The tax reform must prepare Slovenia for the ageing of its population. The reform should incentivise older workers to stay in the labour market longer and younger workers to enter the labour market sooner. It should also reduce unemployment, in particular among the low-skilled. In order to put the funding of the welfare system on a solid footing without reducing entitlements to social benefits, the reform will need to shift part of the funding of the pension and health system from SSCs towards general taxation. The tax reform should be complemented with a broader set of reforms, including the pension and health care systems.

English

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