Background information

Heavy rains between 4 and 6 August 2023 caused devastating floods that claimed several lives, destroyed homes, and swept away roads and infrastructure. Floods and landslides made many sites unreachable, and settlements cut off from access to water, gas and electricity. Half of Slovenian municipalities, or 17,203 square kilometres, were severely hit, particularly the Gorenjska, Štajerska, and Koroška regions. The government's swift response aimed at providing temporary housing, repairing damage, and keeping people employed. Up to 14 January 2024, the government paid €557.8 million for flood relief and damage repair (i.e. temporary layoff scheme, repairs of roads, extraordinary social cash benefits, intervention costs for municipalities and Civil Protection forces, cleaning up watercourses, repairs of agricultural buildings, prepayment for damage in the economy, prepayment of housing renovation, etc.). The activities to repair the damage, estimated at a total value of €3 billion, continue. The Act on Reconstruction, Development and Provision of Financial Resources (ZORZFS), adopted in December 2023, laid some temporary tax levies on the economy to provide funding for flood reconstruction

Content of measure

The Act on Reconstruction, Development and Provision of Financial Resources (ZORZFS) established additional levies to finance projects related to post-flood recovery. The reconstruction fund will be financed by:

1. A 0.2% tax on the total assets of banks and savings banks;
2. An increase in corporate tax by 3 percentage points, thus raising it to 22%;
3. The net and available profit of the Slovenian Sovereign Holding.

Tax levies are temporary and will be valid until 31 December 2028. Furthermore, the act also changes the tax on natural persons' investments in securities issued by the Republic of Slovenia in 2024, 2025 or 2026. In personal income tax, they will be treated the same as interest on deposits with banks and savings banks (taxable above €1,000).

Use of measure

Slovenia has received a grant of €428.4 million from the European Union Solidarity Fund (EUSF), in addition to funds provided by the ZORZFS act. The European Commission has disbursed €328.4 million, along with €100 million that Slovenia received as advance payments at the end of last year. This total grant surpasses the amount promised by European Commission President Ursula von der Leyen during her visit to Slovenia shortly after the floods. Slovenia is required to implement the planned reconstruction measures within 18 months. Many of these measures are currently being carried out or have already been completed

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	Companies

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Unknown

Involvement

The employers’ organisations, members of the Economic and Social Council (Chamber of Commerce and Industry of Slovenia – GZS, Slovenian Chamber of Commerce – TZS, Chamber of Craft and Small Business of Slovenia – OZS, Association of Employers of Slovenia – ZDS, Association of Employers in Craft and Small Business of Slovenia – ZDOPS) have blocked the negotiations since 20 July 2023, i.e. before the flood in August 2023. The emergency law was thus prepared without prior negotiations with the social partners in the Economic and Social Council. However, the organisations held informal talks with the Ministries of Economy, Labour and Finance on flood recovery measures

Views and reactions

The government’s proposal to fund the post-flood reconstruction by temporarily increasing corporate tax from 19% to 22% raised great dissatisfaction among employer organisations and bilateral business chambers. At the press conference on 4 December 2023, they demanded that Prime Minister Robert Golob withdraw the increase in corporation tax, introduce a compulsory solidarity contribution (which would distribute the burden for reconstruction among all employees and employers), remove the proposal on additional social contributions for health care (i.e. LTC insurance and compulsory health insurance) and postpone the law on cross-border provision of services. The chairman of GZS summed up their demands, saying that ‘all laws that impose additional burdens on the economy must be stopped’ (MMC, 2023). The Parliament approved all legal changes proposed by the government against employers’ demands

Sources

• 04 December 2023: MMC (2023), We won't call for protests, but measures need to be balanced – meeting with the PM on Wednesda (www.rtvslo.si)
• 22 December 2023: Act on Reconstruction, Development and Provision of Financial Resources (Zakon o obnovi, razvoju in zagotavljanju finančnih sredstev, ZORZFS (www.pisrs.si)