The basic purpose of the tax reform is to decrease the tax burden imposed on entrepreneurs, Sanader said at the Business Forum, a traditional meeting of government members and businessmen taking part in the International Zagreb Autumn Fair, which began earlier in the day.
Finance Minister Ivan Suker announced changes in income tax schemes with a clearer definition of tax payers, the tax basis and tax relief.
The purpose of the changes to income tax is to redistribute the tax burden in a fairer way, said Sanader, announcing a higher non-taxable salary amount.
Suker said that over 70 percent of tax-payers earned monthly salaries of less than 4,000 kuna, while 49 percent of tax relief arrangements referred to persons with a monthly income of more than 8,000 kuna.
The Prime Minister reiterated that the main objectives of his cabinet's economic policy were cuts in the deficit and a reduction of public spending. In the coming three years the economic growth is projected to rise by four to five percent annually. Plans regarding the construction of infrastructure and capital investments will be carried out, with some 14 billion kuna to be allocated annually for that purpose, and privatisation will go on, Sanader added.
Deputy Prime Minister Andrija Hebrang spoke about plans for improving the business climate and the solution of problems of ailing companies. The incumbent government does not want to resort to bankruptcy procedure in case of such companies, he added.
Hebrang cited tax collection discipline, the removal of administrative barriers, legal security, incentives to small businesses and measures countering grey economy as the priorities of the Sanader cabinet.
Croatia loses some 12.5 billion kuna annually due to grey economy, and some surveys show that about 100,000 people work unregistered, which alone causes a loss of 7.5 billion kuna, he added.
(1EUR = 7.4 kuna)