LOWER HOUSE: SDP, HSLS SUPPORT TAX CHANGES

ZAGREB, Dec 7 (Hina) - Representatives of the Social Democratic Party (SDP) and the Croatian Social Liberal Party (HSLS) support bills on income and profit taxes whereas the votes of opposition's Croatian Party of Rights (HSP) and the Croatian Christian Democratic Union (HKDU) will depend on whether the government adopts their amendments, it was said during the afternoon part of Thursday's session of the House of Representatives. The HSLS bench supports cutting the profit tax rate from 35 to 20 percent, says Jadranko Mijalic, who also questions if this will annul the negative effects of the cancellation of the protective interest rate. Mijalic also welcomes tax benefits for companies on the amount of wages of all newly-employed in one year, because he says this will stimulate employment. It is good, he adds, that the bill on income tax envisages the introduction of benefits for life insurance premiums, additional health insurance and voluntary pension insurance but it is questionable whether introducing a 15-percent tax on dividends will affect the capital market. The HSP/HKDU bench believes this will have a negative effect on shareholding in Croatia and opposes the introduction of taxes on dividends, said Tonci Tadic. He also believes the introduction of a third income tax rate will not yield any significant result. One should increase the lowest wages and reduce discrepancies between salaries and this can only be done by introducing more tax rates, says Tadic. He proposes that instead of the current fixed deduction, a personal deduction amounting to the lowest wage, to be determined by the government, should be introduced. Tadic believes that tax benefits for companies for the purchase of new equipment are not sufficient and that the entire reinvested profit should be exempt from taxes. (hina) jn rml