As Slovenia struggles to avoid an inevitable bailout, it pursues a plan that will instead make the size of the eventual bailout larger.
Please consider the inane “Action Plan” for Eurozone Straggler Slovenia.
The new government of struggling eurozone member Slovenia is expected to announce Thursday an action plan aimed at avoiding a bailout, reportedly including privatisations, “crisis” taxes and austerity cuts.
Moody’s last week cut its rating on Slovenia two notches to “junk”, the economy has been in recession since 2011, unemployment stands at 13.5 percent and voters are fed up with their political leaders.
According to leaked details, Bratusek is eyeing a “crisis” levy of 0.5-5.0 percent on all wages, to hike in 2014 value-added tax (VAT), a tax on property and other measures to boost state revenues.
Trifecta of Stupidity
Is there not one bureaucrat who can be fired? What about changes to work rules to make the country more productive? Is every cent Slovenia spends necessary?
Hiking taxes in a recession is the single worst thing a country can do, yet Slovenia proposes a trio of them. When Slovenia slumps further into the gutter (and it will if they implement even a portion of these proposals), Keynesian clowns will holler “austerity ruined Slovenia”.
Nothing could be further from the truth. Tax hikes in a recession are not austerity, they are stupidity, and Slovenia is going for the tax-trifecta of a tax on wages, a hike in the VAT, and a hike on property taxes.
Unemployment, already at 13.5%, will hit 20% if this plan is implemented.
Mike “Mish” Shedlock