As Poslovni Dnevnik/Marija Brnic writes, while it’s excellent that the government has recognised the spirit of the economy and the level of damage that can be caused by rising energy prices, this is only a rough framework and much will depend on how the implementation of Croatian inflation measures is defined and organised.
As such, the Croatian Government’s package of measures to alleviate inflationary pressures was commented by Ivan Miloloza, the owner of Munja, one of the companies that has been seriously affected by the multiple increase in gas prices.
As presented by Prime Minister Andrej Plenkovic, the Croatian inflation measures are a package which is quite comprehensive, it has a wide range when it comes to how much of society it will cover, as it does for products for which VAT will be reduced. On top of that, there’s a lot of assistance provided for enterprise owners and businessmen, who, just like ”normal” people, will receive vouchers for covering part of the cost of gas, while farmers will receive support for the purchase of mineral fertilisers.
The total value of the package of Croatian inflation measures stands at a massive 4.8 billion kuna, and the largest part refers to households. Measures for the economy, according to the government, had to be of small value, and couldn’t be targeted, for example, at gas suppliers, because what’s been built into this package is possible only according to European Commission (EC) rules. These Croatian inflation measures will take effect on April the 1st.
The application coincides with the end of the winter season, so the government expects that the effect will be to maximise the impact on household budgets and preserve purchasing power, and thus contribute to the continuation of the trend of recovery and competitiveness of the domestic economy.
For those deeply affected by the drastic rise in gas prices, the word on everyone’s lips now is just how the use of fuel/gas vouchers will look in practice. The realisation was announced through Hamag-Bicro, where they have no more information, but at the presentation it was said that the application of measures will not be retroactive. This is exactly what received the most negative assessments from business owners, especially from those who own smaller companies, whose gas costs exploded on November the 15th last year, increasing anywhere between three and seven times.
“This ordeal isn’t going to end just because of this announcement, we won’t be breathing a huge sigh of relief come April the 1st,” they said from one of the enterprises from this affected group of company owners.
Micro, small and medium enterprises, with an annual consumption of up to 10 Gwh, will be able to count on coverage of up to 15 lipa per Kwh, and the subsidised amount will be deducted from their vouchers every month until March the 30th, 2023.
According to the government’s estimate, about 600 million kuna will be needed for these Croatian inflation measures, and it should cover 99 percent of companies in that group. The largest consumer of gas in the economy, Petrokemija, will not be able to use this measure, but will partially feel the relief of the burden due to price shocks by the covering of the costs of farmers, who will receive subsidies for the purchase of mineral fertilisers.
They can count on subsidies of up to 20 hectares of agricultural land, for the first 10 hectares the price will be 450 kuna per hectare, and for the remaining ones – 250 kuna. These Croatian inflation measures are expected to cover about 88,000 farms across the country, and 200 million kuna is planned for the measure.
And for fishermen, about 2000 of them, 50 million kuna of support for the costs of blue diesel has been provided. The Croatian Chamber of Agriculture will discuss the measures in more detail as we move forward, but President Mladen Jakopovic expects that some producers will still be left somewhat dissatisfied. He also hopes that the Ministry of Agriculture will show some additional sensitivity to production, especially when it comes to livestock.
Farmers and producers are positive about the reduction of VAT on a number of products, and this regime includes gas and heat, for which the rate will be permanently reduced to 13 percent, the same amount as for electricity, while from April the 1st 2022 to March the 31st 2023, VAT on gas will be reduced by 5 percent.
The catering sector is hurt by the fact that coffee, tea and juices are not included in the list of food items which will have VAT reduced, which they have been asking the government to do for a long time now.
Reactions were immediately fueled by skepticism and the expectation that lower VAT would not be felt on final product prices. HOK pointed out that, since the package of Croatian inflation measures comes into force in a month and a half only, the question remains as to what extent a reduction in the prices of products and services can even be expected, given that a large number of business owners are already suffering damage.
The Prime Minister could only state that the government has taken the first step, and has called on everyone in the chain to show solidarity and not use the opportunity for profit, and he said that the engagement of consumer protection associations will now be important. HUP CEO Damir Zoric also called on customers to shun those who don’t show solidarity in fighting rising inflation.
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