ZAGREB, May 23 (Hina) - The Finances and State Budget Committee of the Croatian parliament's House of Representatives on Tuesday endorsed government-motioned bills on taxes, contributions and excise taxes. The motion was not endorsed
by the Croatian Democratic Union (HDZ). "Unemployment is Croatia's biggest issue, and the basic point of the government's entire package of measures is to give impetus to a development cycle and to employment," Deputy Finance Minister Damir Kustrak said presenting the bills. According to the deputy minister, an instantaneous reduction of contributions to pension and health insurance is the most efficient measure of inciting employment. The government has to that end suggested a two percent reduction in said contributions, which according to Kustrak should decrease the cost of labour by 3.3 percent. Kustrak said the investment climate would also be stimulated by changes
ZAGREB, May 23 (Hina) - The Finances and State Budget Committee of
the Croatian parliament's House of Representatives on Tuesday
endorsed government-motioned bills on taxes, contributions and
excise taxes.
The motion was not endorsed by the Croatian Democratic Union
(HDZ).
"Unemployment is Croatia's biggest issue, and the basic point of
the government's entire package of measures is to give impetus to a
development cycle and to employment," Deputy Finance Minister
Damir Kustrak said presenting the bills.
According to the deputy minister, an instantaneous reduction of
contributions to pension and health insurance is the most efficient
measure of inciting employment. The government has to that end
suggested a two percent reduction in said contributions, which
according to Kustrak should decrease the cost of labour by 3.3
percent.
Kustrak said the investment climate would also be stimulated by
changes in profit taxation which would exempt companies from paying
reinvested profit tax. The government has also suggested tax relief
in salaries of all people a company employed over the past year.
The government plans on tapping the state budget for the three
billion kuna loss resulting from reductions in pension and health
insurance contributions. To ensure the money, the government has
suggested higher excise taxes on oil products, alcoholic drinks,
tobacco, automobiles, coffee, and beer.
The government will also take measures to increase the collection
of contributions.
Asked why the government had not also suggested a reduction in
contributions on salaries, which would incite a growth in salaries,
Kustrak asserted the instantaneous objective was to relieve the
employer and not to raise salaries.
HDZ's Djuro Njavro asked how the budget deficit resulting from
different profit and income taxes would be financed if higher
excise taxes covered losses in extra-budgetary funds, such as the
pension and insurance funds. He believes higher excise taxes,
especially on oil products, could give strength to inflation
pressures and urge a general increase in prices.
Kustrak said government analyses indicated that most companies
would save on lower labour cost more than lose due to higher fuel
prices. A major increase in prices is therefore not to be expected,
he asserted.
Croatia's petrol and diesel prices will remain among the lowest in
the region despite higher excise taxes, the deputy finance minister
said. As regards coffee, beer, and alcohol, higher excise taxes on
these products should not significantly increase their prices, he
added.
Kustrak said reductions in profit and income taxes would not affect
the stability of this year's state budget because the effects of the
changes will be visible only next year.
A delay in the payment of Value Added Tax from the tenth to the 30th
in the month for the preceding month should have a positive effect
on financial trends and companies' liquidity, as well as enable a
more efficient control over VAT collection, Kustrak concluded.
(hina) ha jn