Given that the new ZPIZ-2 law further increases the burden on the self-employed, I will show that the self-employed (at least those who cannot earn beyond a high hourly rate) are already heavily burdened, but will be beyond any reasonable limit under the new law. Those who earn an income through low hourly rates can barely manage in such a system already if they want to be honest (=pay all taxes and contributions), but after the new system it will be impossible for many.
I took the example of instruction, where today the maximum price per hour (according to the advertisements) is €12.5, and €10 if you want to be competitive. Let's say you have 5 hours a day (which is not easy to achieve), and let's say you have 8 hours a day, 22 days a month. The example is for a self-employed person with normalised costs. The first table shows income and expenditure, contributions etc. and how much is left at the end under the old system. The second table shows this under the new system (but without a transition period, as will be the case after full implementation).
The tables are: Gross2 = cost per hour x hours per month Normalised costs 25% = Gross2 x 0.25 Gross1 = Gross2 - Normalised costs Gross1 per year is also the basis on which DURS determines which contribution bracket the self-employed person falls into Contributions per month are set according to this bracket (this was the case for December 2010) - I would point out here that even at 5 hours per day at €10, you fall into the second contribution bracket. Net2 = Gross1 - contributions From Net2, income tax is actually calculated at the end (that's why I haven't included any deductions so far) Income tax = (Net - 3051)x0.16 (3051=general allowance), none of the above cases comes above 16% of Net1, that's how much you end up with in your pocket, per month and per year
Table 1 (old system)
 
 
Table 2 (new system)
 
 
This shows that under the old system, someone earning €1 100 gross2 per month would actually have only €447 left in his pocket. Under the new system, he will be left with only €304. And even someone earning a seemingly decent €2,200 gross2 per month will have €997 left over under the old system, but only €853 under the new system. It is true that if the costs are less than 25%, depending on the type of work, this acts as a correction (see net1 total costs , last row of the tables), but the final amounts are still low. The main burden on the self-employed on low incomes is contributions, not income tax.
I do not know on what basis the general perception has been formed that the self-employed get through very well, because the actual data show a completely different picture. It cannot, however, be heaped on all the burdens of those self-employed individuals who come in and show low incomes. Inspection services need to be trained to be able to detect such cases, not to change the system and hit everyone if they are not able to do so (this also goes in the context of proving the origin of assets, which has been much talked about lately).
The old system already discourages social entrepreneurship (if by that we mean working for a low hourly wage, for a living). The new one will be much worse. I think it is also clear from the above data that if you actually want to survive in one of these things (like instruction or something), it is simply a necessity of life that part of the income is hidden (because to burden clients with these costs would mean raising the hourly rate to over €20, which nobody will pay). So if stronger measures succeed in cracking down on this kind of shadow economy, there will be neither a shadow nor a white economy, I hope that is clear. The way to think about it is to relieve, not to add to, the burden at the lower end of the scale (which falls more broadly under the heading of labour cost relief, which is much talked about as being enormous in this country). Now to the anomalies of the new system. This new system, where you are in a certain contribution bracket so that you pay for the upper limit of that bracket (you used to pay for the lower) is unfair and needs to be changed. It would be fair to introduce a calculation on an actual basis, not by class (supposedly this is not too complicated, it will just be necessary to enter the actual basis in a certain formula). In addition, retrospective settlement could be introduced, rather than paying contributions in the following year according to the previous year (this could remain as a starting point, but adjusted over the year according to current income). Retrospective settlement will also make it unnecessary to be "penalised" with a higher grade if, under the new law, you apply for a lower grade and are wrong by more than (it seems to me) 20%.
Also, the determination of the contribution base is not fair, it is determined by the gross average salary in Slovenia (which does not include employer contributions), and the self-employed's base includes employer contributions, not just employee contributions. Since the self-employed also pay employer contributions, these should be deducted from the base to bring them on a par with employees (since there they are gross of employer contributions).
Some time ago (about 2 years ago), a proposal was made by the Chamber of Commerce and Industry, I think, to raise the standard cost to 40%. In the light of the above data, it is seen as very sensible because it would partially correct the very high burden.
APPENDIX
I attach two more tables showing gross2 (total income incl. normal costs), contributions, income tax per month (not advance payment, final calculation), net1(after contributions and income tax) and net1+normal costs.
Old system
 
New system
 

 
The problem with both systems is for those with a low gross2, with the new system exacerbating this. Under the old system, you need a gross2 of close to €1,300 to get your net1 to the guaranteed wage, but under the new system it is as high as €1,500. I have shown, using the example of instruction, that such gross2 is very difficult to achieve. The same applies to all activities where higher hourly rates cannot be achieved.
However, if we look at a gross2 of €800 under the new system (such a gross2 just falls into the next contribution bracket), net1 is only €88, or net1+normal costs €288. On a seemingly still quite decent gross2 income, this is realistically not enough to live on! Such a s.p. is working just to pay the contributions, and since these are counted in the basis for determining the contributions, it is very difficult to get into the lower bracket (where there is hardly anything better; gross2 €700, net1 €183, with expenses €358).
Something needs to be done at the lower end of the scale to ensure that s.p.'s can exist or operate legally here. The options are:
-contributions are certainly not calculated at the upper limit of the class, but at most on an actual basis
-if there is to be a minimum base, it should be the minimum wage, although I do not see why this is necessary, and thus to set a minimum for the operation of an S.P.-.
-add some basic normalized costs, e.g. 200€, these reduce the contribution base (as e.g. for income tax) and then 25% of the gross2 as before.
-if not 40% of normalised costs would be recognised everywhere (as even higher up the scale the gap between gross2 and net1 is huge), 40% could be recognised up to some gross2, and for the difference from there onwards e.g. 25%,
-so a system of e.g. €200 + 40% up to some gross2 and 25% for the difference from there on would quite realistically reflect the typical real situation where everyone has some fixed costs, while the variable part decreases with increasing gross2 (of course, not all cases can be covered).