ZAGREB, February 7, 2020 – The Lipa taxpayers’ association opposes the Finance Ministry’s plan to increase taxes on tobacco, coffee and non-alcoholic beverages as it believes that their sole purpose is to patch holes in the budget caused by the failure to implement reforms and lack of transparency.
“The (planned) government regulations will increase the tax burden. However, the government does not plan to spend the money to be obtained through higher taxes on improving the health sector but rather for patching budget holes. Even though the ministry is referring to an EU directive, we note that the EU has continually recommended that Croatia implement reforms in all segments of its public sector yet those recommendations are ignored to a large extent,” the association said in a statement.
It believes that the introduction of excise taxes on e-cigarette liquid and heated tobacco products is a very bad measure that will discourage consumers from switching to less harmful products.
Excise taxes already account for more than 80% of the price of cigarettes and they end up in the state budget while hospitals still owe more than nine billion kuna and work in very bad conditions, Lipa says.
It proposes that in order to keep the same level of the tax burden, the state should lower fuel excise taxes while increasing tobacco taxes and introducing special taxes on sugar and coffee.
Tobacco prices are expected to go up soon because the Finance Ministry recently put to public consultation a draft regulation envisaging an increase in tobacco excise taxes by 40 kuna per thousand cigarettes, and it also plans to introduce excise taxes on some new tobacco products, including e-cigarette liquid and heated tobacco products.
The public consultation lasted until February 3.
The government last increased excise taxes on tobacco in 2018, after which the price of cigarettes went up by around 2 kuna per packet.
More news about taxes in Croatia can be found in the Business section.
