Finance Minister on Economic Policies of New Government

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Minister Zdravko Marić continues to support a reduction in VAT and income tax rates.

Finance Minister Zdravko Marić said on Wednesday that he would continue to advocate for a tax reform, which would include a reduction in the rates of VAT and income tax, reports Jutarnji List on September 14, 2016.

“Tax reform, tax relief, simplicity and, above all, stability – these are the things which we have been talking about. You know that I have worked on the tax reform for months, together with an expert group and my team at the Finance Ministry. That is something which this society needs”, said Marić, adding that he hoped the next government would be formed soon and that tax reform could be implemented starting from next year. During election campaign, Marić said that HDZ wanted to increase a non-taxable part of income from 2,600 to 3,700 kuna a month. People with lower incomes would not pay income tax at all.

The Finance Minister also said that he was sure that this year’s plan to reduce budget deficit to 2.6 percent of GDP would be fulfilled and added that for the next year the plan was to reduce it to 2 percent. He pointed out that next year 27 billion kuna would have to be paid from the budget for various financial obligations and expressed confidence that there would be no problem to refinance these obligations. “This is something which we have already started to work on”, said the Minister.

He also commented on positive economic trends in the first half of this year. “Economic growth of 2.8 percent in the first half of this year is good after six years of recession, but it is not enough. We should continue with the implementation of structural measures and even accelerate them.” He explained that the goal was to achieve economic growth that will generate new jobs and contribute to the demographic renewal, “because in recent years we have witnessed negative demographic trends and emigration of young people”.

In the first half of this year, the state budget deficit amounted to 2.4 billion kuna or 0.7 percent of GDP, which is 5 billion kuna less than in the same period last year. “We have not seen such a low deficit for a long time”, said Marić, stressing that he would “keep the budget under maximum control until the end of the year as well”.


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