ZAGREB, Nov 18 (Hina) - Wednesday's session of the Croatian Sabor's +(parliament) House of Representatives continued with a discussion +on two bills envisaging the lowering of the current Value Added Tax +rate, proposed by opposition
parties.+ The bills, proposed by the Social Democratic Party (SDP) and +Croatian People's Party (HNS), envisage the lowering of the current +single VAT rate of 22 per cent to 17 that is, 18 per cent. +The bills also propose the introduction of a zero VAT rate for basic +food products, medicines, childrens food, books, newspapers and +similar products.+ The SDP has also suggested the introduction of a six per cent rate +for some branches of economy.+ SDP and HNS representatives said they had decided to put forward +their proposals primarily because of the negative effects of the +current VAT rate, which, in their opinion, is too high.+ The application of the current VAT rate has cau
ZAGREB, Nov 18 (Hina) - Wednesday's session of the Croatian Sabor's
(parliament) House of Representatives continued with a discussion
on two bills envisaging the lowering of the current Value Added Tax
rate, proposed by opposition parties.
The bills, proposed by the Social Democratic Party (SDP) and
Croatian People's Party (HNS), envisage the lowering of the current
single VAT rate of 22 per cent to 17 that is, 18 per cent.
The bills also propose the introduction of a zero VAT rate for basic
food products, medicines, childrens food, books, newspapers and
similar products.
The SDP has also suggested the introduction of a six per cent rate
for some branches of economy.
SDP and HNS representatives said they had decided to put forward
their proposals primarily because of the negative effects of the
current VAT rate, which, in their opinion, is too high.
The application of the current VAT rate has caused the economic
situation to deteriorate and the rate proved to be an additional
factor in enhancing social differences, said Mato Arlovic (SDP).
Arlovic believes that the lowering of the current rate may be an
incentive for economy and employment.
Radimir Cacic (HNS) stressed the connection between the single VAT
rate and the budget.
Estimating about the budgetary revenue from the VAT this year were
in the neighbourhood of 15 billion kuna, said Cacic adding that the
revenue would in the end amount to 20 billion.
It is exactly this difference of five billion kuna that is reason
enough for lowering the current rate, he said.
Neither of the two bills have received support from the Government
or parliamentary bodies.
In a discussion that followed, the Opposition supported the bills
while the Croatian Democratic Union (HDZ) bench rejected them.
Opposition MPs warned that the VAT had caused a rise of
unemployment, insolvency, and of some prices, such as those of
utility services (60%). They also noted that the VAT had
"destroyed" the health system and the publishing sector and made
Croatia an unattractive tourist destination.
The VAT has resulted also in an internal debt exceeding US$10
billion, as well as in more than 25,000 companies with blocked
drawing accounts, the Croatian Social Liberal Party (HSLS) bench
warned. The party believes that Croatia's economy will collapse if
the current tax rate is not changed.
The move to lower the current VAT rate and introduce several new
ones received support from the Istrian Democratic Assembly (IDS),
Croatian Peasants' Party (HSS) and the Istrian Democratic Forum
(IDF).
The HDZ bench believes that bills aimed at the reduction of
budgetary income are not realistic. The VAT has been well received
and it is just. Its calculation and collecting is simple and it is an
additional source of income, the HDZ bench noted.
The VAT does have certain unfavourable social effects but they have
been removed with the help of other measures, HDZ MPs said.
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