ZAGREB, June 23 (Hina) - Outlining in parliament on Monday new government steps introducing tax benefits for companies and craftsmen investing in development, research, and training, Finance Minister Mato Crkvenac pointed the finger
at HDZ president Ivo Sanader who, confident of winning the next parliamentary election, recently said he would cut taxes when he came into power.
ZAGREB, June 23 (Hina) - Outlining in parliament on Monday new
government steps introducing tax benefits for companies and
craftsmen investing in development, research, and training,
Finance Minister Mato Crkvenac pointed the finger at HDZ president
Ivo Sanader who, confident of winning the next parliamentary
election, recently said he would cut taxes when he came into power.
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"It would be interesting to hear how Sanader intends to reduce taxes
while at the same time keeping the tax revenue, because if you
reduce tax rates, revenue falls. How would we then finance
increased tax expenditure, such as childbirth and other
allowances?" said Crkvenac.
Sanader's HDZ (Croatian Democratic Union) is constantly urging
augmenting childbirth allowances.
Crkvenac said tax cuts would only increase the budgetary deficit
and public debt. In practice, the reduction of tax rates has never
worked in the short term, and such a tax paradox exists only in
theory, he said.
"Neither economists nor foreign investors are complaining about
tax benefits in Croatia, and when compared to some 20 European
countries, Croatia's taxes are not steep," the minister said. He
added that in the tax policy the government had focused on
stimulating exports and employment so that tax benefits could help
companies, small and medium-sized businessmen.
When economic growth is stable, inflation is 1.5-2 percent and
development is stable, the main issue of economic development
becomes companies' investing in development, research and employee
training to make the final product competitive for exporting, said
Crkvenac.
The government is following the Irish model, he said, adding
amendments to the Income Tax Law and the Profit Tax Law were aimed at
inciting development which, according to simulations in some
companies, shows that more than 200 million kuna (EUR26.7 mln) can
be saved by companies which set up special research and development
units because they will be exempt from paying profit tax.
Under said amendments, patents, licences, and capital expenditures
for development may be written off, as may tangible property.
Also, the government has proposed reducing base tax rates for
development and education projects. The amendments incite
cooperation between economic and science and research institutions
so that the purchase of finished ideas and products is not taxed.
The base tax rate for employee training is also cut.
Tax benefits will be recognised in next year's accounting to
companies and craftsmen which invested in development this year,
said Crkvenac.
Only the Croatian Peasant Party bench took part in today's debate on
said changes, endorsing them, while the Social Liberals said they
were not sufficiently clear.
(hina) ha sb