Croatian Employers Association Against New Tobacco Taxes

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The government is thinking about introducing additional taxes to decrease the debts of Croatia’s healthcare system.

The Croatian Employers’ Association (HUP) announced that it was opposed to the introduction of additional taxes on cigarettes and tobacco products since it does not believe that can solve financial problems of the healthcare system, reports N1 on November 4, 2017.

“The illegal sale of tobacco products, as well as accompanying illegal activities, are on the rise, which is why Croatia is directly losing more than a billion kuna a year, which indirectly leads to a loss of income and loss of jobs in the legitimate sales chain. The accompanying negative social consequences are financially immeasurable,” said the HUP in a statement responding to reports about the possible introduction of additional taxes on cigarettes and tobacco products.

According to the HUP, over the last five years, cigarettes prices have risen more than 40 percent due to their aligning with EU directives, which has resulted in Croatian citizens having to buy the most expensive cigarettes in Europe compared to the average income.”

Croatia is in the process of aligning the forms and levels of taxation of tobacco products with EU directives, according to the HUP, which added that any new taxes outside of this framework would be contrary to EU guidelines.

“It is important to point out that the target group to which these laws apply (smokers) pays into the state budget about six billion kuna per year by buying tobacco products. The introduction of the additional tax burden would not result in substantially higher revenues. On the contrary, it is possible that the revenues would actually decline below the current level, which would further jeopardise the stability of the state budget, and indirectly the financing of the healthcare system,” the HUP pointed out.

The organisation also warned about other negative social consequences of possible tobacco price increase, such as increased smuggling and criminal activities. “The past experience and financial indicators prove that price rises lead to just the opposite of what is expected. There is a rise of the black market and illegal activities. In such situation, consumers find alternative sources for buying cheaper tobacco products which are not subject to any quality controls nor do they contribute to increasing budgetary revenues,” said the HUP.

Given that this is an issue which concerns the whole society, the HUP expects Prime Minister’s reaction and calls on the relevant ministries to state their official position on the possible introduction of additional taxes as soon as possible.

Translated from N1.


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