Slovenian PM to call confidence vote, scraps VAT hike

by Reuters
Monday, 7 April 2014 08:55 GMT

(Adds quote, analyst, background)

By Marja Novak

LJUBLJANA, April 7 (Reuters) - The Slovenian Prime Minister Alenka Bratusek said she will call a confidence vote in parliament after being forced to scrap a planned increase in value-added tax.

"I will seek a confidence vote (in parliament) soon," Bratusek said on Sunday after a meeting with her coalition partners, one of which rejected the VAT hike.

Government sources said the vote was likely to take place later in April, and analysts said Bratusek had sufficient support in parliament to win.

Bratusek's administration is seeking ways to bring down the country's fiscal deficit after pumping 3.3 billion euros in to local banks, which are mostly state-owned and have piled up a huge amount of bad loans through years of reckless lending.

The country narrowly avoided an international bailout in December.

The government had planned to boost state revenues via a new real estate tax it estimated would bring in some 1.5 percent of budget income this year.

But the country's constitutional court rejected that tax last month, prompting the government to propose raising VAT instead

Bratusek on Sunday scrapped that plan tool after one of the four parties in her coalition - the Civic List - said higher sales tax would hurt the economy and there was room for more savings in the budget.

The coalition said it now plans to raise excise duties and impose spending cuts to bridge the fiscal gap.

Analysts said a lack of support for Bratusek within her Positive Slovenia (PS) party could still bring down the government before the next national elections due in late 2015.

"I expect she will win the confidence vote in parliament but if her own party breaks up or elects another head of the party, the government could still fall," said Tanja Staric, a political analyst at daily Delo.

"That would lead to early elections since no other coalition government is possible within the existing parliament."

Zoran Jankovic, the mayor of Ljubljana, who founded the PS in 2011, has been pressing for a party congress at which he could stand for the party presidency.

If he were elected the government would collapse since the PS's coalition partners have all said they would not cooperate with Jankovic, who is under investigation over alleged corruption.

(Reporting By Marja Novak; Editing by John Stonestreet)

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