ZAGREB, Jan 28(Hina) - Most opposition parties in the Croatian parliament on Wednesday criticised the announced reduction of the VAT rate from 22 to 20 percent, claiming that it will not have any effect on living standards, but will
rather significantly reduce state revenue. The parliamentary majority believes that the proposed measure will decrease prices and help economic recovery.
ZAGREB, Jan 28(Hina) - Most opposition parties in the Croatian
parliament on Wednesday criticised the announced reduction of the VAT
rate from 22 to 20 percent, claiming that it will not have any effect
on living standards, but will rather significantly reduce state
revenue. The parliamentary majority believes that the proposed measure
will decrease prices and help economic recovery.#L#
Even if the reduction of the VAT rate from 22 to 20 percent does cause
a decrease in prices, it is unrealistic to expect that it will improve
living standards, especially those of the most destitute categories,
said Slavko Linic of the Social Democratic Party (SDP).
The SDP proposes introducing a lower VAT rate for food, children
supplies and tourism, which it believes will benefit socially
sensitive groups and stimulate economic growth.
The Croatian Peasant Party (HSS) agreed that citizens would not feel
the effects of the proposed reduction of VAT in their family budgets.
Zlatko Tomcic of the HSS believes that citizens would benefit more
from the introduction of a zero VAT rate for daily supplies and from
privileged rates for some branches, such as tourism, agriculture and
the food industry.
With a VAT rate of 11 percent, those branches would be competitive,
said Tomcic, proposing that this rate be applied to domestic products,
while the basic rate of 22 percent should be applied to imported
goods.
Radimir Cacic of the Croatian People's Party/Primorje-Gorski Kotar
Alliance (HNS-PGS) said the proposed reduction of VAT would stimulate
imports and decrease the competitiveness of the domestic economy,
since as much as 75 percent of VAT is collected on the border.
Tonci Tadic of the Croatian Party of Rights (HSP) agreed that the
effects of the reduction of VAT were uncertain and that the proposed
cut could cause a boomerang effect, increasing excise taxes and
decreasing living standards.
Besides the HDZ, the Istrian Democratic Assembly (IDS) agrees with the
proposed VAT cut. However, IDS MP Damir Kajin opposed its postponement
for next year.
Ivan Cehok of the Social Liberal Party/Democratic Centre (HSLS-DC)
club of deputies said he agreed with any tax reduction as long as the
government could guarantee that it would not jeopardise the financing
of public needs.
Finance Minister Ivan Suker dismissed claims that the proposed measure
will not stimulate economic development. The minister considers the
proposed cut the first step towards a tax reform. The tax system is
not in the function of those whom it should benefit and it lacks its
social function, Suker said.
(Hina) rml sb