ZAGREB, Dec 2 (Hina) - The International Monetary Fund (IMF) would not support a reduction of the VAT rate in Croatia if that were to result in a higher budget deficit, IMF representative in Croatia John Norregaard told Poslovni
tjednik weekly.
ZAGREB, Dec 2 (Hina) - The International Monetary Fund (IMF) would
not support a reduction of the VAT rate in Croatia if that were to
result in a higher budget deficit, IMF representative in Croatia
John Norregaard told Poslovni tjednik weekly. #L#
If VAT was reduced from 22 to 20 percent, the loss of revenue would
have to be made up for by considerably cutting expenditure or
increasing other taxes, which would account for 1-1.5 percent of
GDP, Norregaard said in an interview.
He added that the effects of reducing VAT, such as increased
purchasing power, better collection of taxes, and a reduced grey
economy, could not compensate for the lost budget revenue.
If Croatia continues to implement the appropriate macroeconomic
policy, 2004 will see a strong economic growth rate, although a
little slower than this year, low inflation, further reduction of
unemployment, and stabilisation of the external debt.
(hina) ha