The minister said that the nontaxable part of the monthly income would rise from 1,500 kuna to 1,600 kuna and that the total tax relief in a year can reach 12,000 kuna.
One of the novelties is the introduction of the category 'the other kind of income', which is earned by athletes, singers, and artists whose income would be taxed under the relevant rules.
The minister is planning also to revoke profit tax.
After being acquainted with major elements of the tax reforms, leaders of trade union federations said the poorest groups of Croatians would not profit from those changes.
The GSV vice-chairman and unionists' representative, Boris Kunst, said in this context that the lowest wages would increase by some 10 kuna monthly according to those proposals.
"I do not believe that this money will improve the position of the poorest, although the state budget would lose 850 million kuna because of this measure," Kunst said commenting on the new proposal on the income tax.
He announced a joint position of trade union federations on the matter, to be elaborated until the end of this week.
After that the GSV tax reform commission will discus the topic at a session scheduled for 9 November.
The director-general of the Croatian Employers' Association (HUP), Djuro Popijac, welcomed the news about the annulment of the tax on profit and the maintenance of tax relief in research, development, and education.
He, however, voiced some reservations about the maintenance of the 45 percent tax rate as the tax rate on the highest monthly salaries.
"Although this has no greater tax effect, it will de-stimulate the best work in the economy," the representative of employers said.
Under the new reform, rates of income tax on different amounts of salaries will remain the same, namely the income tax on salaries up to 3,200 kuna will be 15 percent, the next rate is 25 percent for salaries up to 8,000 kuna, a 35-percent rate is imposed on salaries from 8,000 to 22,400 kuna, and the 45-percent rate on salaries above 22,400 kuna.
The finance minister also presented the basic parameters of the 2005 draft budget, including a 3.5 percent budgetary deficit, a growth of Gross Domestic Product of 4.1 percent, and a low 2.6 inflation rate.
The turnover in retail trade should increase by 7.9 percent, the financial effects of the tourist industry are expected to increase by five percent, and the minister has envisaged the continuation of the positive trend of a faster growth of exports than those of imports.
Prime Minister Ivo Sander attended Tuesday's session of the GSV, which consists of representatives of employers, trade unions and the government.
The social partners will discuss the new reform in the coming days.