After announcing plans to raise the standard rate of VAT from 22% to 24% that would have applied from May till the end of the year, Slovenia has announced plans to raise duties and cut spending instead. The initial plan to raise VAT was in response to the rejection of a new tax on real estate. The real estate tax, the planned VAT increase, and now the planned increase in duties and spending cuts all came about in an effort to lower the country's budget deficit to under 3% of GDP and avoid EU penalties.