BILL ON VAT PRESENTED AT LOWER HOUSE

ZAGREB, Sept 30 (Hina) - The bill on Value Added Tax submitted by the Croatian Democratic Union (HDZ) is a socially considerate and responsible proposal because it guarantees that there will be no destabilisation of the state budget and the overall finances, HDZ's Djuro Njavro said on Thursday at the Croatian National Parliament. The HDZ bill on VAT suggests the introduction of a zero VAT rate on bread, milk, books, and medicines which are on the Croatian Health Insurance Fund (HZZO) list. Dragica Zgrebec of the Social Democratic Party (SDP) presented to the Parliament SDP's bill on VAT saying their bill was also responsible. #L# Introducing a zero VAT rate on bread, milk, books, and medicines on the HZZO list will mean 500 million kuna (DM138.8 million) less in the state budget, Najvro said. However, that will be compensated for by increasing excise taxes on tobacco, expensive cars, and luxury products. An additional 100 million kuna (DM25.6 million) will be collected in this way only, with increased excise taxes on expensive cars, which will bring an additional 45 million kuna (DM11.5 million), and excise taxes on gold, diamonds, and other luxury goods (10 million kuna). Budgetary users will also save several hundred million kuna, Njavro said, adding the health fund will save some 300 million kuna (DM76.9 million). The HDZ bill also contributes to the fairness of the tax system; those who have and spend more and buy luxury goods will have to carry more tax burden, Njavro said. It is expected that the introduction of zero VAT rate would result in lower prices of bread, milk, books, and medicines, he added. The SDP, said Dragica Zgrebec, suggests that the current single VAT rate of 22 per cent be decreased to 17 per cent, because it would considerably alleviate the tax burden in the economy. The party also suggests the introduction of a privileged tax rate of six per cent for agricultural and food products, construction, and power production, as well as a zero tax rate for basic food stuffs, children clothing, footwear etc. The SDP also proposes that VAT be paid when it is convenient for the entrepreneur and when he himself has collected his claims. Commenting on the explanation which the Government presented rejecting SDP's bill on VAT, Zgrebec said it was of political nature. Commenting on the Government claim that SDP's bill would mean between seven and eight billion kuna less in the budget, Zgrebec said the decrease of taxes on a larger scope of products would result in a decrease of their prices and citizens will spend more. This would result in achieving the same or even a larger amount of money in the budget, Zgrebec said. She emphasised the budget had to be based on real indicators and the financial power of the population. The budget must not be used for covering failed business transactions and for the rehabilitation of banks and companies which have gone bankrupt, she said. She dismissed claims that SDP's bill was connected with election campaigning. (hina) rml