development report 2012 - UMAR

160 Development Report 2012
Indicators of Slovenia’s development
Economic structure of
taxes and contributions
A comparison of the economic structures of taxation
systems 1 shows that Slovenia diverges from the EU
average in its higher tax burden on consumption and
labour and a lower burden of capital. The share of
taxes on consumption in total taxes and contributions
totalled 37.3% in Slovenia in 2009 and exceeded the
EU average (33.4%). In terms of the share of taxes on
consumption in total taxes Slovenia is in the top third
of EU countries, as in 2009 only eight countries had a
higher share. The share of taxes on labour (52.0%) was
also above the EU average (48.0%). Slovenia is also
ranked in the upper half of the EU on this indicator,
with a higher share recorded in only ten Member
States. The share of taxes on capital accounted for
just 11.0% of all taxes and contributions in Slovenia in
2009, which is a much lower figure than in the EU as a
whole (18.8%). With regard to the share of these taxes
in total taxes, Slovenia is at the tail-end of the EU, with
only Estonia and Latvia trailing behind.
In 2009, the gap in the economic structure of taxes
between Slovenia and the EU average narrowed
relative to 2000. In Slovenia, the otherwise very low
share of taxes on capital in total taxes and contributions
grew, while the average share in the EU declined.
After 2005, Slovenia recorded a more pronounced
increase in the tax burden on capital, particularly
in 2007 when the conditions for capital gains were
favourable and the rate of corporate income tax was
still high (25%), with no significant tax relief. In 2007,
income tax recorded a ten-year high. Following the
tax reform in 2007 the burden on capital started to
decline again. The decline was due to a gradual phasedown
of the corporate income tax rate (from 25% to
20% in 2010), higher tax relief and changes in the
personal income tax. Meanwhile, the macroeconomic
situation deteriorated. Although the burden on
capital has been declining since 2007, in 2009 it was
still higher than in 2000. The tax burden on labour in
the overall tax burden decreased in Slovenia, while
growing slightly in the EU as a whole. Slovenia has a
higher tax burden on labour than other EU countries
mainly because of high social security contributions.
Slovenia is fifth among EU Member States regarding
social security contributions as a share of GDP; only
France, Germany, the Czech Republic and Austria
have higher shares. After the tax reform in 2007, the
burden on labour otherwise declined somewhat due
to changes in the personal income tax and a gradual
phasing out of the payroll tax, but is still higher than
the EU average. The share of taxes on consumption
in total taxes and contributions increased slightly
both in Slovenia and the EU. It was fairly stable in
the entire period. After 2002, it had risen somewhat
due to a higher value added tax rate, while in the
following years it was mainly impacted by changes in
excise duties, which were being adjusted to meet the
requirements of the EU directives and to compensate
for changes in the prices of excise products and the
shortfall of budgetary revenues during the crisis.
The calculation and comparison of implicit tax
rates 2 also confirm the above-average tax burden
on labour in Slovenia in 2009. In Slovenia, the
implicit tax rate on consumption in 2009 was 24.2%
compared to the EU average of 20.9%. Only seven
Member States, Nordic countries in particular, had
higher rates than Slovenia. In Slovenia the implicit
tax rate on consumption has been dropping since
2003, while increasing on average in the EU. In 2009,
the calculated implicit tax rate on labour in Slovenia
was 34.9%, higher than the EU average of 32.9% due
to the relatively high social security contributions.
Twelve Member States had higher rates than Slovenia
in 2009. The implicit tax rate on capital for 2009 for
Slovenia is estimated at 21.0%, below the EU-25 3
average of 24.6%. Nine countries had lower rates than
Slovenia, including the Baltic countries and the Czech
Republic, Hungary, Poland and Slovakia.
1
The tax classification is based on the classification of
taxes according to ESA-95 and the common rules for their
classification. Taxes on consumption are defined as taxes on
transactions between consumers and producers and as taxes
on final consumption. Taxes on labour are directly tied to wages
and paid by employees and employers. Taxes on capital relate
to taxes on capital, corporate income, income from household
capital (annuities, dividends, interests, other income from
property), capital gains, on property, etc.
2
The implicit tax rate on consumption is defined as the
ratio between taxes on consumption and final household
consumption expenditure on the territory of a country
according to the methodology of national accounts. The implicit
tax rate on labour is calculated as the ratio between taxes on
labour and the compensation of employees according to the
methodology of national accounts, increased by taxes on wage
bill and payroll.
3
EU-27 data not available.