PARLIAMENT DEBATES LOCAL SELF-GOVERNMENT FINANCING LAW

ZAGREB, June 27 (Hina) - Deputy Finance Minister Damir Kustrak said in parliament on Wednesday all conditions had been provided to transfer some obligations in the education, health, and welfare sectors from the state onto the local level, so that decentralisation should start on July 1. Explaining a final bill of amendments to the Law on the Financing of Local Self-Government, Kustrak said more than 1.6 billion kuna (some $186 million) would be ensured for counties, municipalities, and towns. Units of local self-government will increase their share in joint taxes, thus ensuring one third of the necessary funds. The rest will be earmarked from the state budget, i.e. the settlement fund. Kustrak said the state would give away 21 percent of income tax receipts. The main new aspect in connection with county taxes is the taxation of automobiles which are older than ten years. Tax on more recent vehicles, which makes up 90 percent of county tax receipts, will also be slightly raised. Kustrak said it was up to towns and municipalities to decide if to introduce eight taxes. The law stipulates only the highest rates, which also refers to surtax on income tax. Surtax is currently paid in only 12 towns, although about 50 percent of the Croatian population pays it. Kustrak said this was not an additional tax burden on citizens, especially given that surtax may but does not have to be introduced. The deputy minister explained taxes on untended farmland, unused business real estate, and unused building sites were not being introduced to make more money but to activate the real estate. Kustrak said the state budget had earmarked funds for counties, municipalities, and towns, and that they would be paid onto their accounts. Local authorities must revise their budgets by September 30. (hina) ha sb