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Slovenia Plans to Tax Second Homes to Boost Budget Revenues

Residential and commercial buildings stand on the city skyline as viewed from Ljubljansk Castle in Ljubljana, Slovenia, on Tuesday, June 4, 2019. Slovenia isn’t backing away from its collision course with the European Central Bank over compensating investors who lost money in a 2013 bank bailout that may violate euro-area rules, Prime Minister Marjan Sarec said. Photographer: Oliver Bunic/Bloomberg (Oliver Bunic/Bloomberg)

(Bloomberg) -- Slovenia plans to impose a tax on second homes to raise budget revenue and slow the appreciation of property prices amid a housing shortage.

The move is a political gamble. Prime Minister Robert Golob’s administration is behind in polls ahead of the 2026 parliamentary election and is facing resistance to the tax from homeowners and the opposition.

The cabinet is proposing an annual levy of 1.45% of the affected properties’ general market value, Golob told reporters in Ljubljana on Monday. The measure may net more than €600 million ($624 million) annually, he said, with most of the proceeds to be used to cover a reduction in labor taxes.

Proposed tax changes, which need parliamentary approval, would potentially apply to about 525,000 properties, according to estimates from the finance ministry.

Neighboring Croatia passed its own tax on second homes earlier this month, with the levy entering into force on Jan. 1.

©2024 Bloomberg L.P.