MOST to Demand Changes to Tax Reform Plans

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It seems that tax reform could become the first point of disagreement in the new government.

Tax reform plans, which were announced on Thursday by Finance Minister Zdravko Marić, could become the first point of conflict between MOST and HDZ, since it is obvious that the junior partner in the government will insist on some of its own proposals, reports Jutarnji List on October 30, 2016.

HDZ’s Minister Marić plans to send the tax reform proposals to Parliament by 9 December, together with the 2017 budget. MOST representatives gave several statements in recent days which clearly demonstrate that they will demand certain changes to be made to proposals before they are sent to Parliament.

MOST leader and Speaker of Parliament Petrov has still not revealed any details, saying that consultations within the government are ongoing. On the other hand, HDZ representatives say there are no consultations and that MOST has expressed its reservations only through the media. MOST unofficially says that Minister Marić was working on his proposals until the last moment and that they did not want to interfere until the document was ready to be presented. “Honestly, I have not even watched the presentation at the cabinet session, because I had some other business to attend. I have heard what Mr. Marić had to say. Of course, there are suggestions that some things could be changed further and then we will come out with a final proposal. I do not think that everything will stay as it has been proposed”, said Petrov.

Nikola Grmoja, an MP and one of leaders of MOST, also said that there were some things that MOST did not consider to be acceptable and would have to be revised in talks with the Finance Minister. Grmoja specifically mentioned the VAT increase for catering and restaurant services, since the hospitality and tourism industry already formed its prices for the next season with current VAT rates.

Although it is still not known what MOST wants to change, its election manifesto reveals some possible points of contention. In its manifesto, MOST demanded abolition of taxes on dividends and profit shares, and they also had different approach when it comes to income tax cuts. Their intention was to increase incomes of socially vulnerable groups by introducing more tax brackets, and not fewer as Marić is now proposing. In general, MOST’s policy was to reduce inequality in income distribution and poverty rate by tax relief, while Marić is putting greater emphasis on raising incomes for those with higher salaries.

It remains to be seen whether the final version of detailed tax reform proposals, whose first draft should be presented to the government in November, will include any of MOST’s demands.


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