Withdrawn »Crisis Tax« – a Pleasant Surprise of the Minister of Finance of the Republic of Slovenia, dr. Uroš Čufer and the Prime Minister of the Republic of Slovenia, mag. Alenka Bratušek
(prof.dr.Dušan Mramor)
At the AmCham Business Breakfast held today, we asked the authorities and experts on Slovenian and European financial and economic environment about their views and comments on the government measures, on the so-called »Stability Pact«. We were also interested in their proposals of how to provide and implement fast and effective solutions in order to regain the confidence of international financial markets, investors, financial stability and to boost the economy.
Mag. Ajša Vodnik, Executive Director of the American Chamber of Commerce – AmCham Slovenia, in her welcome speech informed all the present guests of the main points of the letter that had been sent to the Prime Minister of the Republic of Slovenia by American Chamber of Commerce – AmCham Slovenia and the Embassy of the United States of America to the Republic of Slovenia, with the wish to help with constructive suggestions of the international economic community to approach the business environment to foreign investors and thus stimulate the economic growth.
The guest speakers of the AmCham Business Breakfast were:
mag. Barbara Guzina, Co-chair of the AmCham Tax Committee and Partner, A Taks International
mag. Mojca Kleva Kekuš, Member of the European Parliament, who prepared a report about European measures that are necessary for tackling tax fraud and tax havens
Gavin McLean, Partner in the Capital Markets Group, White & Case LLP, who represents arrangers, corporate issuers and sovereigns in a wide variety of transactions including MTNs, repackaging programs, convertible and exchange bonds, securitizations, restructurings and other liability management exercises,
prof.dr. Dušan Mramor, Dean and Full Professor at the University of Ljubljana Faculty of Economics and former Minister of Finance of the Republic of Slovenia,
Matej Potokar, MBA, President of AmCham Slovenia and General Manager, Microsoft Services Central and Eastern Europe (CEE),
mag. Boštjan Vasle, Director, Institute of Macroeconomic Analysis and Development – IMAD
The discussion was led by mag. Barbara Žibret Kralj, Audit Department Director, Deloitte.
Kleva: In case the European Commission finds the Government measures as insufficient, it will not mean the end of the world. There is no need to panic.
Mag. Mojca Kleva Kekuš, Member of the European Parliament, to the issue raised by mag. Barbara Žibret Kralj, about the situation in the EU, said that Slovenia is only a part of the process, that takes place at the European level. MEP explained that all the countries are namely faced with the problem of unemployment, financial crisis, the crisis in the field of R&D… »Like in Slovenia, also most of other countries are preparing their national reform programs, as also most of them are facing the same problems as Slovenia does. We are not the only ones with problems. We speak about Slovenia also in the European Parliament and I must say that mostly favorably. Brussels experts do not consider the macroeconomic situation as bad as we do. There is no need to panic«, was convinced mag. Kleva.
»If the European Commission finds the government measures as insufficient, it will not be the end of the world«, was determined and optimistic mag. Mojca Kleva Kekuš, MEP. She concluded that any additional measures may still be negotiated between the government and the European Commission.
Mramor: Withdrawn »Crisis Tax« – a pleasant surprise of the Minister of Finance of the Republic of Slovenia, dr. Uroš Čufer and the Prime Minister of the Republic of Slovenia, mag. Alenka Bratušek
Prof.dr. Dušan Mramor, Dean and Full Professor at the University of Ljubljana Faculty of Economics and former Minister of Finance of the Republic of Slovenia, in the introduction presented a broader picture of the situation and expressed his disappointment at the OECD report, as he believes that it does not include anything that has actually been done. In addition, according to his estimation, the macroeconomic indicators of Slovenia can not possibly be compared to those of Cyprus, as shown in the report. »We are export-oriented and not financially – as Cyprus is. We have lower unemployment rate, as also our borrowing is, for which I wondered, why the experts had not shown the real picture«, was explicit prof.dr.Mramor.
He sees the recent decision of the government not to raise the VAT and to call off the crisis tax on wages, as a pleasant surprise. In his view, the realization of the crisis tax could indeed be problematic and believes that the retention of this measure can be a good starting point for negotiations of the government with its social partners. He spoke highly of the Minister of Finance, dr. Čufer and his stroke of withdrawing »the crisis tax« as well his ability to be especially in present circumstances able to convince the whole government to withdraw this measure.
The planned 300 million EUR of savings in public spending, prof. dr. Mramor sees as a difficult, however an attainable task.
Mramor also ensures that despite selling part of the state property, we still remain independent and autonomous. »Privatization brings different – both positive and negative effects. In his point of view the fiscal consolidation is only possible through growth, for which we need to find additional measures to increase it, as there according to his belief are still not enough.
Vasle: The worst would be – do nothing
Boštjan Vasle, Director, Institute of Macroeconomic Analysis and Development – IMAD, pointed out that it has become clear that in the EU there were three groups of countries formed: successful with stable macroeconomic indicators (the fewest), medium-successful with satisfactory macroeconomic indicators, and the third group, in which, in his opinion are only Slovenia and Spain.
Based on the analysis, he concludes that it “When different measures are being compared, it turns out that a better choice would be measures for public spending decrease,” believes Vasle and proposes as the less economically harmful measure (as regards the earnings in the present situation) to be the raise of VAT, as it had been suggested.
Vasle estimates selling bonds as being only partly a success. He sees a big plus in the fact that we are still able to convince the investors (»raise the money«), and is on the other hand of course aware of the importance of the high interest on borrowed money.
Potokar: We should start with privatization as soon as possible!
Matej Potokar, General Manager, Microsoft Services Central and Eastern Europe (CEE), and the President of AmCham Slovenia pointed out that the opinion of the European Commission about the report of our government will be of great importance – either as concerns the financial markets or enterprises and of course, for foreign investors. In his opinion, the essential question is how to move from now on, from mere survival, as the measures that are put on the table at the moment do not denote a development strategy.
He also commented the assessment, indicating that we would get more than 700 million EUR for 15 proposed companies, by saying: “Wow! 739 million EUR! It is a lot of money in these circumstances. We of course all know, that now it is certainly not the time to sell, but it is time to purchase, and yet we are in a situation, when we need to start with privatization right away.”
According to his estimation, Slovenia would with such move become part of global flows and he at the same time warns that it would be wrong if the state starts selling without sufficient consideration and that it has to be decided where the state wants to maintain its influence. In his point of view, the ownership of state-owned enterprises is not the true »national interest«. He as well advises that the state should when selling not only try to achieve short-term goals in order to fill the budget deficit. He is convinced that everything is not only in money and above all sees the importance in privatization and in attracting foreign investors to establish a stable business environment with good corporative management.
»For every $ invested by the investor, 1+ $ of revenue is expected – for which a political and economic stability is required. If we are transparent, we will give an important signal denoting that foreign investors are welcome«, said Potokar.
“By increasing the inflow of foreign capital we would get more examples of good corporate management and perspective young people would get the opportunity to assert themselves in the top international business environment and it is of key importance that they will enriched with knowledge and experiences also return”, concluded Potokar.
Guzina: The gray and the black economy can actually be taxed – urgently and as soon as possible!
Mag. Barbara Guzina, Co-chair of the AmCham Tax Committee and Partner, A Taks International, pointed out that the increase of taxes does not result in positive effects, yet she understands the government to wish to raise VAT, since out of 27 EU countries, 20 countries have already raised it, which turned out as a relatively efficient and successful short-term measure, whereas as regards a long-term period raise of any tax can not prove successful. She is also convinced that the gray and the black economy can actually be taxed: »Urgently and as soon as possible«!
McLean: Slovenia is still attractive for foreign investments
Gavin McLean, Partner in the Capital Markets Group, White & Case LLP partner, like his co-speakers estimates the recent bond issue as good news in the present situation. “Slovenia has in this way bought itself quite some time and therefore has to make the best use of it”, said Gavin McLean. He clearly and decisively replied that Slovenia is still attractive to foreign investments and indicated some of the successfully executed investments and transactions in which White&Case cooperated in recent years, namely: Savatech, Triglav, Droga Kolinska. There are great companies in Slovenia, led by excellent people.
McLean also stressed out the need to carefully consider the good and bad experiences of other countries with the so-called »Bad bank«, at which he points out the transparency as the key deciding factor to prove whether the measure is good or not.
»Things have to be done immediately! Time is of crucial importance. You have to in any case complete what you have started«, was convinced McLean.
