On 29 March 2016 the IMF issued a concluding statement on the completion of discussions with Slovenia under Article IV of its articles of agreement. The report notes that employment and private consumption have been strengthened by an export led recovery in 2014/15. Decisive action is however required to deal with significant constraints to growth and vulnerabilities.
The IMF considers that a modern broad-based property tax should be introduced from 2017. This could initially be revenue-neutral while technical issues are resolved but could in the medium term raise higher tax revenue than the levies it would replace.
The Slovenian government’s intention to shift the burden of taxation away from labor could reduce labor costs and support employment growth. Loss of revenue from this move would be offset by increasing excise taxes on fuel, which could be done in view of the current low energy prices. Also the transfer pricing rules could be tightened to raise more corporate income tax revenue.
The IMF report also recommends other structural reforms as in some areas the potential gain from improvement is large and the rules are not in line with EU or world best practice. Obstacles to foreign ownership and investment could be removed and equity finance could be facilitated. Skills mismatches could be eliminated by tailoring education to the needs of the market place.
