Pengovsky is seriously slacking blog-wise. But the day refuses to have more than 26 hours on average, so there’s just not enough time. There’s lots to tell, but things will have to get worse before they get better, I’m afraid. But to offset the damage a bit, here’s a picture of foggy Ljubljana as seen by your average motorist. Just to make you feel better about your own morning rush hour
Yesterday Slovenian parliament passed a law imposing additional 49% tax on wages exceeding 12,500 EUR per month and bonuses exceeding 25,000 EUR per year. The law, which effectively imposes a 90% tax on top wages of state-owned companies or companies which have applied for state help was proposed by Zares and is controversial enough to have caught the attention of Reuters. The law was supported by all parliamentary parties, which shouldn’t come as a surprise, given the current economic and financial crisis, in light of which wages and bonuses of some managers, which were huge to begin with, seem enormous in an economy which is projected to drop 8% in 2009 and which suffered a 10% year-on-year drop in the second quarter of this year.
Give me money by Magnifico. A must if you haven’t seen it yet
According to Slovenian Statistics Office, the average gross wage in Slovenia in July 09 was around 1,420 EUR (average net wage in the same period was 922 EUR), which means that earnings higher than ten times the average salary will fall under this “special tax” law. To be even more specific, the law applies to earnings between 1 January 2009 and 31 December 2010 or whenever state help scheme expires (in case of a privately owned company). The law was – among other things – prompted by the fact that former Marjan Kramar CEO of Nova Ljubljanska Banka (NLB) collected about one million euros in accumulated bonuses at a time when the country was already in turmoil over tycoon-loans and when the first contours of crisis were becoming visible. One million knaaks is a lot of money no matter how you look at it but in that particular climate it was just one excess by the fat cats too many.
However. This “special tax” law stinks and is probably the worst piece of populist legislation passed ever since Janez Janša got his ass kicked in the elections.
First of all, if the law indeed is (as it seems to be) a response to Kramar’s bonus excesses, this is yet another example of a introducing systemic changes to deal with specific problems. This was a trademark of Janša’s government, which went on a legislative rampage every time a specific individual needed to be replaced, demoted or otherwise made an example of. Four years of reflex legislation was quite enough, thank you very much. If the left bloc is going to use tricks of the political right, we might just as well close the shop and call it a day.
Secondly, the law will most likely be declared unconstitutional. Since it retroactively taxes wages and bonuses paid since 1 January 2009, it interferes with “an already acquired right or benefit” (not sure about the exact legal term). For this reason and especially in light of decisions in similar cases the Constitutional Court is expected to have a field day with it.
Thirdly. Immediately after the enormity of Kramar’s bonus became know, finance minister Franci Križanič publicly outlined legislation going along exactly the same lines (90% tax on very high wages) but was quickly rebuffed by legal experts for reasons cited above (another case of him working better than speaking).
Fourthly (is that a word?): When Križanič finally got his bearings and was persuaded not to try to introduce the special 90% tax (which, remember is to be comprised from the basic 41% tax for top wages and sweetened by additional 49% tax for excess wages and bonuses) he went about and tried to amend the current taxation system, by raising the top wage tax from 41% to 48%. All hell broke loose, the opposition and part of the coalition pinned him to the wall and he was forced to withdraw the proposal. And now everybody is happily introducing a 90% tax? What the fuck?
Fifthly (how about this?): The law holds mostly symbolic value. Monies returned to state coffers will be barely worth a mention. But since no political party can afford to look like it is protecting the fat cats, everyone voted for the law. But this is no time for symbolism. People are losing their jobs, GDP is southbound and budget deficit is bulging. Some real and bold moves are needed. But by passing symbolic measures the parliament and the coalition (and the opposition in this case) is wasting time we haven’t got.
And last, but certainly not least: I’m willing to bet the law was passed precisely because for reasons for which it shouldn’t have been passed. The opposition and the coalition probably knowing that it will meet its early demise in the Constitutional court, which meant that they could support it without the danger of actually making a difference. And thus everything will remain the same.
Dogs bark but the caravan moves on.
P.S: As you have no doubt noticed, pengovsky is posting a bit more irregularly as of late. Sorry about that, but it seems that one of the effect of the crisis is that we all have to work more for less, while the day refuses to be extended beyond 24 hours.
Today for the third year running The Firm™ will broadcast live Rock for Future Generations, a rock concert organised by Društvo Planet Zemlja (Planet Earth Society). This year the concert returns to Ljubljana and the line-up includes (among others) GlosaArt, Zlatko & Optimisti, Pavle Kavec & Oko, Ave, Jadranka Juras and Terra Folk featuring Anja Bukovec
Webcast will begin shortly before 1700 hrs CET. Silverlight plugin is required for viewing.
Shame Slovenia did’t win a medal Eurobasket, but apparently for some the championship continues
Just a quick update on the Pahor-Kosor agreement. After Slovenian PM Pahor took some serious flak for making the deal (words like “high treason”, “complete failure” and “utter defeat” were used”), the very same thing is happening in Croatia, where words like “deception”, “lies” and “betrayal of vital national interests” were used.
Symptomatically, both PMs are being vocally criticised by their respective opposition. In Slovenia, the People’s party (SLS) and the nationalists (SNS) are saying that the deal did not go far enough and that it basically concedes territory, while in Croatia, which finds itself in the early stages of a very hot presidential race, the highest ranking political casualty to date is Davorin Rudolf, who resigned as chief negotiator on the border issue. He stated that the second proposal by EU Commissioner Olli Rhen (the one which is stipulated in the agreement as the starting point for continuation of negotiations) is extremely bad for Croatia and that he will have nothing to do with it. Curiously enough, he resigned yesterday, was then reportedly persuaded by PM Kosor to become her personal advisor on the matter, but today he publicly stated that he will not accept any position vis-a-vis the issue. On the Croatian political front the Social democrats (SDP) and Democratic Union of Istria (IDS) say that the deal went too far and that it basically – concedes territory. Sounds awfully similar to what is being said in Slovenia. Go figure.
On that note, let it be known that although it criticised PM Pahor heavily, Janez Janša’s SDS abstained from the vote on lifting the blockade of Croatian EU negotiations. I guess that they are a bit unsure about how to play this thing. They know that Pahor went out on a limb, but voting against and then being proved wrong would be highly embarrassing, besides, they can’t afford to be made look uncooperative after they nearly derailed Croatian NATO entry by defending their creative accounting techniques earlier this year.
Pengovsky doesn’t know much about how things stand in the ruling coalition in Croatia, but he has it on good authority that the ruling coalition in Slovenia only grudgingly OK’d the broad outlines of the deal. There seems to be precious little enthusiasm for the agreement on either side of the border. Afterall, even pengovsky was unsure about what to make of it.
But the way I see it, if both of them are being called names for making the deal, then they must be doing something right.