CRO FIN MIN INFORMS LOWER HOUSE OF GOVT'S PACKAGE OF TAX MEASURES

ZAGREB, May 25 (Hina) - The Sabor's House of Representatives resumed its session on Thursday morning with a discussion on the Government's package of measures aimed at cutting contributions for the health and pension insurance and at raising excise duties and changes of taxes. On behalf of the Government that proposes the measures, Finance Minister Mato Crkvenac informed the national parliament's lower house of these development-bound measures. Crkvenac said the measures had been planned to boost primarily employment, and claimed that an increase in excise duties would not trigger off a rise in prices of commodities and services. Besides, prices and the currency exchange rate remain stable, he added. This package decreases the labour cost and its social impact will be such that additional burden will be put on the shoulders of richer strata of the society. In addition, for the first time farmers and fishermen will be exempt from paying taxes on fuel. The Finance Minister asserted that the country's banking system was stable and that at the moment banks were "super-liquid", while the exchange rate of kuna is very stable. Banks will be forced to ensure means for the development, he said and stressed that "Croatia is being at the cross-roads." In the first 100 days since its inauguration the Government has made efforts to consolidate the country financially, settle great debts and to promote Croatia abroad in order to make it more attractive for foreign investors, Crkvenac added. The Government is now ahead of "the second stage of measures" that represent the long-term, aggressive and resolute application of the development policy in the economic structure. New measures are orientated primarily to creation of more jobs, the stabilisation of economy, increase in exports and decline in illiquidity, he explained. Crkvenac claimed that costs of the increase in fuel prices would be lower for companies as against the saving they could have in the cuts of labour costs. The Government's measures will help abate the tax pressure and simultaneously lay new foundations for an effective monetary policy. They also strengthen Croatia's stand in negotiations with the International Monetary Fund (IMF) and the World Bank, while today's admission of Croatia into the Partnership for Peace and its prospects of entering the World Trade Organisation (WTO) soon and coming closer to the EU create a completely new position for Zagreb in the foreign political context, Crkvenac stressed. He said the Government was projecting draft budgets for the 2001- 2003 period, and the plans will be presented this September. The Government suggested the conclusion of a social pact to define a policy of salaries and stated it would launch the struggle against the grey market. A more important change in this package is that the deadline for the payment of the Value Added Tax (VAT) will be prolonged from the tenth day in a month to the end of the month so that liquidity may be improved in the entrepreneurship and businesses by one billion kuna annually. Crkvenac calculated that the predicted rise in excise duties will provide 2.2 billion kuna (approximately 258 million US dollars) per year, namely about 1.5 billion kuna this year ($176 million) this year, in the state budget. (hina) mm ms