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Published: 07/05/2021

Analysis of fiscal effects arising from the proposed amendments to tax legislation

At its meeting on 2 June 2021, the National Assembly’s Commission for Public Finance Control adopted a decision proposing the Fiscal Council prepare a comprehensive analysis of fiscal effects of the government’s tax package and submit it to the Commission. The Fiscal Council received the Commission’s decision on 3 June 2021.

The analysis drawn up by the Fiscal Council consists of three parts: (i) a presentation of the estimated direct or static impact of the proposed tax reforms on the general government balance; (ii) an overview of the current tax burden in areas of expected tax reforms including an international comparison; (iii) a model assessment of the dynamic impact of the proposed tax reforms. The dynamic analysis is more comprehensive than the static assessment, however, its results should also be considered with caution due to the parameter estimates included in the models. In the model estimates, the Fiscal Council was not able to take into consideration the entire range of factors that could affect the competitiveness of the economy and the potential GDP.

In its explanation of the proposed tax reforms, the Slovenian government presented the assessment of their direct and static impact on the general government balance, expressing its belief that the loss of general government revenue could be compensated by higher economic growth or higher consumption and other measures. However, the government presented no calculations as to the expected extent of economic growth or consumption following the proposed tax changes and no potential additional measures necessary to neutralise their impact on the general government balance.

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