Croatia Elections 2015: Both Main Coalitions Promise Lower Taxes

Total Croatia News

Taxation promises from the two main Croatian coalitions ahead of the elections.

The Czech Republic has overtaken Croatia by average wages, and quite soon Poland and Slovakia will do the same. They have made the best possible use of their EU membership: they have attracted investments, raised their GDP, increased employment, and finally raised wages, reports Vecernji List on October 10, 2015.

Croatian wages had stagnated until this year and had ranged between 5,300 and 5,500 kuna, depending on seasonal fluctuations. Only this year has the average salary increased over 5,700 kuna, with net wages increasing about 3 percent after the government reduced the tax burden. If it wins the forthcoming parliamentary elections, SDP has announced that it will further increase the non-taxable income to 3,000 kuna a month. Average workers would get about 160 kuna more, and those who earn 10,000 kuna would receive an increase of about 300 kuna.

In the parts of HDZ’s electoral manifesto which have been published so far, the issue of wages is not featured prominently. On the other hand, HDZ has promised a lower value-added tax rate, better indexation of pensions and 1,000 euros for each newborn child. However, HSLS, a party which is part of HDZ’s coalition, say they would rather actually do what prime minister Milanović is promising. But, personal income tax is the main income of local government units, which were already protesting against the earlier increase in the non-taxable income because they were left without a significant part of their revenues. Finance minister Boris Lalovac and deputy prime minister Branko Grčić claim that the state has compensated their losses through other measures, but the situation will be known only when the local budgets for this year are fully executed.

One of the authors of HDZ’s economic manifesto Tomislav Ćorić said that the HDZ government would increase the standard of living for workers with low levels of income “when conditions are met”. Judging by this, raising of the non-taxable income would not be the first prime ministerial decision by Tomislav Karamarko. Josip Budimir from HSLS says that the increase of non-taxable income was already part of the his party’s manifesto during the last elections. “When we had discussions about that, HDZ responded positively to our proposal to increase the non-taxable income to 3,000 kuna, and we have concluded that this is the direction in which to go. We also think that the highest tax bracket of 40 percent should be abolished, but HDZ believes that it would be too great a loss for local government units”, says Budimir.

Anyway, whoever increases the non-taxable income from 2,600 to 3,000 kuna has to know that local government units will lose about two billion kuna in annual revenues.


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