ZAGREB, May 25 (Hina) - Whether an increase in excise taxes will cause inflation and a drop in the standard of Croatia's citizens, or a reduction in contributions on salaries boost economy and employment were the principal issues of
Thursday's debate parliament's House of Representatives had on a government package of 11 bills related to taxes and contributions. The package is a political decision of enormous significance for Croatia's economy, said Vesna Pusic on behalf of the Liberal Party-Croatian People's Party bench. It should be explained to the public that this is an initiative which will put the "devastated" economy back on its feet and boost the employment rate, she said. Reductions in contributions on pension and health insurance lower the cost of labour, and citizens should be told this simply means that by giving employees the same and perhaps even higher salaries, employers giv
ZAGREB, May 25 (Hina) - Whether an increase in excise taxes will
cause inflation and a drop in the standard of Croatia's citizens, or
a reduction in contributions on salaries boost economy and
employment were the principal issues of Thursday's debate
parliament's House of Representatives had on a government package
of 11 bills related to taxes and contributions.
The package is a political decision of enormous significance for
Croatia's economy, said Vesna Pusic on behalf of the Liberal Party-
Croatian People's Party bench.
It should be explained to the public that this is an initiative
which will put the "devastated" economy back on its feet and boost
the employment rate, she said.
Reductions in contributions on pension and health insurance lower
the cost of labour, and citizens should be told this simply means
that by giving employees the same and perhaps even higher salaries,
employers give less to the state, Pusic asserted, adding this would
give employers the possibility of perhaps employing one instead of
two persons.
This further means that we are starting to solve the problem of
evasion of the payment of contributions, which in turn creates a
climate in which it will be possible to pay salaries, disability
benefits and pensions on a regular basis, Pusic concluded.
Slavko Kojic strongly endorsed the tax bills on behalf of the Social
Democratic Party bench. Extending the deadline for the payment of
Value Added Tax from the tenth to the last in the month will give the
economy more "oxygen" and liquidity, he stated.
All other benches in the ruling six-party coalition endorsed the
package of bills. Opposition MPs on the other hand said the package
would boost inflation and bring the pension and health insurance
funds in an even more difficult situation.
According to the Croatian Democratic Union's Djuro Njavro, an
increase in excise taxes, especially on oil products, will increase
prices by 1.5 to 2.5 percent, which he said could lead to a two-digit
annual inflation rate. This will lead to a drop in citizens'
standard, he asserted.
Reductions in contributions will lead to a huge deficit in the
health and pension funds which it will not be possible to "cover"
from the state budget, Njavro said. He believes the package of bills
is socially unjust because it benefits employers by shifting the
state's "burden" to citizens, and that VAT should be paid on
collected and not invoice value.
The Croatian Party of Rights/Croatian Christian Democratic Union
bench will not endorse the "government package" because according
to Tonci Tadic, "we don't believe in the finance ministers' fairy-
tales on an economic takeoff." The government takes from some to
give to others, he said.
Commenting on the debate, Deputy Finance Minister Damir Kustrak
said an impending reduction of tariffs would exert a considerable
deflationary influence.
(hina) ha jn