LJUBLJANA: Slovenia should reform its tax, pension and health systems to ensure long-term sustainability of public finances, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday.
The OECD study showed Slovenia's budget deficit would soar due to its rapidly ageing population over the next decades unless the reforms are introduced quickly.
"By 2040 Slovenia will have additional ageing related costs in the amount of 7.5 percent of GDP," Bert Brys, head of the OECD's Country Tax Policy Unit, told a news conference.
He said Slovenians, who now retire at the age of about 59, will have to work longer, adding tax reform is needed to make the tax system simpler and fairer.
The OECD said Slovenia should reduce taxes on wages and at the same time broaden the tax base to include various benefits. It also believes the country should increase real-estate tax levels and broaden the value-added-tax base.
The outgoing Finance Minister Mateja Vranicar Erman told the same news conference further steps are needed to ensure a balanced budget in the future after the country's budget last year ran a surplus for the first time in over 20 years.
The government plans a surplus of 0.4 percent of GDP this year versus 0.03 percent last year, helped by higher tax income amid strong economic growth.
Slovenia held a general election on June 3 but it remains unclear when the new government will be formed as the largest party, the centre-right Slovenian Democratic Party, holds only 25 out of 90 seats in parliament and lacks potential coalition partners.
The country, which narrowly avoided an international bailout for its banks in 2013, returned to growth a year later and the government expects the economy to expand by 5.1 percent this year, boosted by exports, investments and household spending.
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