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Slovenia Business Week no. 25: Taxes, Labour Market, Privatisation Key Reforms, Jansa Tells STA

Interview with Slovenian PM Janez Jansa

Tax system and labour market reforms as well as the completion of privatisation are the three key reforms that the government plans to finish by the end of its term in office, Prime Minister Janez Jansa told the Slovenian Press Agency (STA) in an interview.

"The tax burden needs to be eased, taxes need to be somewhat redistributed and the tax system has to be simplified," said Jansa, adding that the country "would go in the direction" of a flat tax as its tax system is "too complicated and has too many brackets".

Yet the controversial flat tax is not the only option. According to Jansa, "it is too early to say whether a flat tax would be applied to all taxes. Probably it would not, as similar results can be achieved in other ways," he explained.

Moreover, the final fate of the tax reform also depends heavily on agreements reached by the social partners - the government, trade unions and employers - and on deals within the bipartisan Development Partnership, initiated by Jansa to muster broad support for government-sponsored reforms.

Regarding labour market reform, the PM said that Slovenia needs a "more flexible labour market to protect those who are more threatened, the 'flexicurity' approach, as used by Denmark." The social partners would need to forego demagogy and cooperate to a large degree, he added.

The privatisation process, inherited in its infancy by the current government, would meanwhile mean a "withdrawal of the state from the economy by the end of its term to such a degree that the state would not have a decisive say in any industry," he explained.

But he said that the state would keep the option to strategically influence key infrastructure sectors. Before the summer, the government should draft privatisation strategies for companies and financial institutions that had been prepared by expert groups.

The two exceptions include the second largest bank, NKBM, and the national telco Telekom Slovenije, for which the government already adopted the privatisation plans in May. "It is impossible to do everything at once," he added.

Independent Slovenia Surpassed Expectations, PM Tells STA

"What were dreams 15 years ago is now reality. Slovenia has made huge progress and, speaking honestly, we have achieved more than even the biggest optimists predicted at the time," PM Janez Jansa told the Slovenian Press Agency (STA) ahead of the 15th anniversary of the country's independence.

Among the achievements of the last 15 years Jansa pointed out that Slovenia increased its GDP by 60% and advanced much faster than any other country of the former Yugoslavia.

It also narrowed the gap with the EU's average development level, secured its future by entering the EU and NATO as well as got a present for its 15th birthday - a ticket to the eurozone, he added.

Yet, Jansa told STA in an interview which also marks 15 years of Slovenia's sole national press agency, that Slovenia has to finish its reforms, complete the privatisation and tackle court backlogs.

However, the EU's recent political decision that Slovenia can adopt the euro on 1 January 2007 has shown that the country "has a sustainable system of public finance, capable of meeting all criteria in the long term", he claimed.

Indeed, the prime minister believes that long term trends are of key importance, as in his opinion they were the ones that have undermined Lithuania's euro bid.

Moreover, the EU's future looks different nowadays after ten states joined the bloc in 2004 and Bulgaria and Romania are expected to do so next year. "We will need some ten years to deal with this enlargement. Only then will the EU be able to take major decisions," he pointed out.

Therefore, Slovenia's upcoming six-month stint as EU chair in the first half of 2008 will most likely not result in any "momentous shifts", Jansa explained, adding that until the next European Parliament elections, scheduled for 2009, "enlargement or any other large step, comparable to those in the past ten years, will be impossible to agree upon".

Jansa is pragmatic regarding Turkey's EU entry. Such a move could only be discussed after the EU deals with the current enlargement. If forced, he explained, Turkey's EU bid would most likely go the same way as the EU constitution, as "at least one EU country would hold a referendum with a negative outcome".

He also touched upon the events after the Second World War, when Slovenians were far less united than 15 years ago when they were almost unanimous in their desire to create an independent state.

"I think that some traumas from the past cannot be easily healed nowadays," he added, arguing that these issues would die out together with the generations that created them.

"What our generation can do is to avoid acting in a way that would broaden such divides. That has been the policy of my government since the start," he said.

Jansa, whose Slovenian Democrats (SDS) have been heading a coalition centre-right government since the 2004 general elections, claims that a "coalition of four partners is always tiring", but is pleased with its overall functioning.

"There were, honestly speaking, fewer problems than I have anticipated, and the coalition partners showed more responsibility," he pointed out.

Coalition governments are the result of Slovenia's proportional electoral system, which calls for numerous meetings and agreements, thereby causing a delay in the decision-making process and the country's development, he argued.

Jansa, still an advocate of a majority system, is convinced that "because Slovenia was governed by coalitions, it lost one percent of growth per year".

The long-time SDS president is moreover pleased with the functioning of his Development Partnership, a bi-partisan initiative aimed at securing the opposition's support for the government-sponsored structural reforms.

"Two opposition parties which have joined the initiative, have done so with clear and honest intentions," he said, adding that it is important that a part of the opposition is ready to cooperate in seeking consensus for Slovenia's development.

Touching upon the role of the Slovenian Press Agency, Jansa labelled it an attribute of independence and statehood, with an immensely important role during Slovenia's fight for independence.

The people took the establishment of the STA with the sense of "now it is for real, we are getting our own institutions. It is no longer Tanjug [former Yugoslavia's press agency], but the STA and that had a major impact on the country's self-confidence," he said.

Source: Slovene Press Agency STA

Author: STA