What is the real goal of the tax reform and who was it made for?
In their open letter to parliament representatives and media, the Rural Tourism Association of Croatia wrote the following:
Considering the proposal for tax reform, very damaging for rural tourism, failed to respect provisions of the Croatian Constitution, the Law on the Effect of Regulations and Law on Information Access, we call on all members of Parliament not to take part in non-constitutional and illegal activities, by opposing proposals for tax laws, returning the text to the government and protecting the dignity of the Croatian Parliament. This will provide the government enough time for adequate preparation of these legal proposals so tax reform may begin in line with other reforms and have full effect coherent with expert advice. Otherwise we announce a demand for the procedure for constitutional merit of these legal proposals.
Keeping in mind the tourism and catering sectors are the only sectors in which VAT on services is being doubled, we feel the tax reform is deeply unjust which is in collision with Article 51 of the Croatian Constitution which states: “Everyone is obliged to partake in the settlement of public expenditures, in line with their economic ability. The tax system is based on principles of equality and justice.” We do not believe caterers are the only ones whose economic ability grew compared to the latest changes to the VAT Law and we do not want, together with citizens, to bear the complete burden of “complete and comprehensive” tax reform, but demand it be spread to other sectors.
Article 11 of the Law on Information Access provides administrative bodies are obliged to consult the public during a 30-day period, except in cases when consultations are undertaken in line with a regulation that defines the procedure of the evaluation of the effect of regulations. Consultations with the public were not performed in line with the Law, more specifically they were not performed at all so the public was completely excluded from the “most important” reform of this government. Based on Article 3 of the Law on the Effect of Regulations, „the evaluation of the effect of regulations requires an analysis of positive and negative effects of regulations on an area of the economy and other areas, with simultaneous consultations with the public. Since the government confirmed 7 legal proposals out of a total 15 had to pass the evaluation of the effect of regulations, which was not done, the government has also violated the Law on the Effect of Regulations.
We also find it inadmissible that certain legal proposals contain norms that are directly in conflict with development strategies adopted by the Croatian Parliament, such as the Strategy for Tourism Development until 2020. This way the government shows complete disregard for the highest representative body and places many tourism and catering employees in legal insecurity, especially investors. Question is why does the Parliament promote Strategies if the government proposes laws which obstruct their realisation?
Such obtuse violation of laws and adopted strategies is unthinkable in developed democratic nations and shows the only concern of the government is patching budget deficit at the expense of those doing good business. Considering the lack of complete information on the effects of the legal proposals (how will they affect small businesses in tourism and catering?), it is absolutely unclear where the government finds projections it speaks of in the sense of easing the current situation. If they exist, but the government hides them, question is also: what is the real goal of the tax reform and who was it made for?
