ZAGREB, October 23, 2019 – Finance Minister Zdravko Marić said on Wednesday that the budget for next year, which the government is expected to put forward next week, would be balanced regardless of the announced increase in the base pay for government and public sector workers, but he would not say if the job complexity index for education workers would be increased.
The minister said the government was working on a budget that included a 6.12% increase in the base pay of government and public sector employees, to be implemented in three rounds.
He noted that the increase would be compensated for by giving up on the planned reduction of the standard 25% VAT rate to 24%.
The pay increase will not reflect on the public debt or the budget’s balance, Marić said.
Asked if he was satisfied with savings made in some sectors, he said that he was satisfied with the overall fiscal policy results.
Asked if teachers who are striking because of dissatisfaction with their wages and the government’s wage policy for the public sector, could count on an increase in their job complexity index before the adoption of the budget for next year, the minister said: “We’ll see”, adding that the government had raised the base pay by 18% and that by the end of its term that increase could exceed 20% with tax reliefs.
He admitted that there was dissatisfaction with the regulation on job complexity indices and that the matter should be analysed.
Last week, the minister said that the announced increase in wages for government and public employees would cost annually between 1.1 and 1.2 billion kuna.
Speaking of tax reliefs, he said that measures such as raising the non-taxable income would increase the number of employees whose income was not taxed by 75-80,000 and that currently the income of 1.7 million people was not taxed.
The financial effect of raising the non-taxable income would amount to 500 million kuna, the minister said, adding that that money would remain in taxpayers’ pockets. As for the fact that the amount would be lost on local government units, Marić said that compensation measures would be defined for local government units, which have income tax as one of the main sources of their income.
Postponing the reduction of the VAT rate by one percentage point will leave between 1.7 and 1.8 billion kuna in the state budget, the minister said.
More budget news can be found in the Business section.
