Key Fiscal Consolidation Measures Confirmed in Parliament

22. 05. 2013

Key Fiscal Consolidation Measures Confirmed in Parliament


The deal reached between the government and public sector trade unions envisages around EUR 208m in annual savings for 2013 and 2014 when combined with agreed savings in material costs.

 

The cuts - a mix of progressive cuts in base pay and cuts in bonuses and top-up pension insurance - will take effect in June as part of amendments to the public sector wage act. Higher VAT was confirmed with amendments to the 2013 and 2014 budget implementation acts. The standard VAT rate will be raised from 20% to 22% and the reduced rate from 8.5% to 9.5% on 1 July. The debate on public sector pay cuts showed broad cross-partisan consensus, though concerns about the impact was voiced by the coalition as well as the opposition. Both sides agreed, however, that savings were necessary.

 

 

Meanwhile, the debate on higher VAT showed distinct differences, as the opposition claimed higher taxes would stifle growth, a point raised by MPs of the Democrats (SDS) and New Slovenia (NSi). Indeed, even members of the coalition Citizens' List (DL) voiced concerns about the measure, though they acknowledged this was a necessary message to the EU that Slovenia is serious about reform. Interestingly, a lot of time was spent debating the license fee for public broadcaster RTV Slovenija, which has nothing to do with fiscal consolidation but is part of the budget implementation acts and was agreed with RTVS trade unions during the austerity talks.

 

After the government's proposal to erase the 5% cut in the fee introduced in January by the fallen SDS-led government was surprisingly defeated in the morning on the Finance and Monetary Policy Committee, the coalition filed a fresh amendment during the plenary, which restored the government's proposal. "This is about securing a quality public service," Majda Potrata of the SocDems defended the additional EUR 5m secured to RTVS by raising the fee again from EUR 12.11 to EUR 12.75. The opposition, whose view had been backed by some coalition members of the committee in the morning, protested, arguing that too much money was spent at the public broadcaster in an intransparent way.

 

SOURCE: The Slovenia Times

Key Fiscal Consolidation Measures Confirmed in Parliament