ZAGREB, March 25 (Hina) - The Croatian parliament opened its session on Thursday with a debate on proposals by the government and the leading opposition party, the Social Democrats (SDP), to reduce Value Added Tax.
ZAGREB, March 25 (Hina) - The Croatian parliament opened its session on
Thursday with a debate on proposals by the government and the leading
opposition party, the Social Democrats (SDP), to reduce Value Added
Tax.#L#
The government's bill, which is in second reading, proposes that VAT
be reduced from the present 22 per cent to 20 per cent at the
beginning of next year, while the SDP proposes an intermediate rate of
12 per cent for agriculture and tourism and a zero rate for baby food
and newspapers.
Noting that a reduction of VAT to 20 per cent was the first step by
the government towards a comprehensive tax reform, which it plans to
carry out over the next year, Finance Minister Ivan Suker said that
the proposed reduction would increase the standard of living and the
competitiveness of Croatian products and decrease government
spending.
"The reduction of VAT to 20 per cent is a more just and better
solution than differentiated rates proposed by the SDP, which will
leave open the possibility of manipulation," the finance minister
said.
Suker cited the poor collection of VAT, particularly in summer during
the tourist season, and of excise tax on oil products, cars and
tobacco products as a major fiscal policy problem.
Unlike the government, the SDP believes that a VAT reduction by two
per cent will not contribute to promoting economic development and
increasing living standards and competitiveness.
SDP deputy Mato Arlovic that the present flat-rate VAT was not based
on the constitutional principle of equality and fairness because
people spent most of their money on food, consumer goods and
children's accessories.
Arlovic said that his party therefore proposed intermediate rates for
food products, agricultural machinery and tourism services so that
Croatia could increase its competitiveness in relation to neighbouring
countries.
The SDP proposed a zero VAT rate for baby food and accessories and
teaching tools in order to help families with children and promote the
policy of high birth-rate. It also proposed a zero rate for newspapers
in order to ensure that citizens were better informed.
(Hina) vm