ZAGREB, November 7, 2019 – Anka Mrak Taritaš (GLAS) said in parliament on Wednesday that the 2019 budget revision was a real picture of the government – it looked nice from the outside but lacked any serious reform, with citizens not feeling any progress despite good economic indicators.
Tax revenues have increased but only owing to an increase in consumption and imports and not owing to an increase in production. The growth of exports has been slowing down for the second year in a row while EU funds are not being sufficiently used, Mrak Taritaš warned in a parliamentary debate on the budget revision.
She also warned about growing imports of labour.
All kinds of pensions fall under the pension system, both privileged and unearned, while people who have really earned their pensions through work barely make ends meet, she said.
Social Democrat Branko Grčić said that tax revenues exceeded the government’s projections by 3.1 billion kuna but that the question was how that money had been spent.
Tax revenues have increased but owing to a growth in consumption. That shows that tax reliefs are just a cosmetic measure because the share of tax revenues in GDP in 2019 has not changed significantly compared to the term of the SDP-led government, standing at 20.4%, Grčić said.
As for budget expenditure, the item of EU funds has been corrected because plans are not being realised – the item has been reduced from 10.8 to 8.1 and then to 7.5 billion kuna, said Grčić, adding that when Croatia’s payment into the EU budget of 3.5 billion kuna was deducted from that amount, the effect of EU funds was 4 billion kuna or only 1% of GDP.
He also noted that the announced increase of non-taxable income from 3,800 to 4,kuna 000 would mean a wage increase of 52 kuna at the most, which he said was negligible.
Božo Petrov of the MOST party warned that the state was consuming two-thirds of economic growth, which he described as politically and socially irresponsible, recalling that in the period from 2016 to 2019 additional revenues of 3 billion kuna had been earned but that more than that had been spent.
“Where has that money gone? Because citizens’ living standards are still poor,” he wondered.
Petrov said that the amount of money absorbed from EU funds was 2.2 billion kuna less than planned and that emigrants’ remittances amounted to 18 billion kuna annually, which, he said, meant that without that money, Croatia would be in the red and in a deep recession.
The state’s spending has been inflated by 30 billion kuna and an additional 3 billion kuna has been taken from citizens’ income, Petrov said, wondering what message this was sending to citizens and adding that there could be no reduction of the tax burden without cutting the state’s spending .
Independent MP Hrvoje Zekanović asked why Croatia was borrowing money if it had a budget surplus.
The report on the budget revision makes no mention of demography and the government has not managed to find an economic model to keep young people in the country, Zekanović said, describing PM Andrej Plenković’s economic policy as a failure.
More budget news can be found in the Politics section.
