ZAGREB, July 8, 2020 – Finance Minister Zdravko Maric said on Wednesday that tax cuts were not a guarantee of higher net wages but that efforts would be made to make that happen because of the idea behind tax cuts was higher wages and higher employment and investments.
Answering reporters’ questions outside the government offices about the government’s plans to reduce income tax rates from 36% to 30% and from 24% to 20%, Maric recalled that the HDZ party’s platform envisaged certain tax changes, adding that the party stood behind that and that they would be an integral part of the government’s programme as well.
He said that the government would continue with tax reliefs, but not this year since major legislative changes regarding the taxation system always took effect with the start of a calendar year.
Maric noted that lower taxes were not a guarantee that net wages would grow because that depended on employers, and in that context, he recalled that not everyone had lowered prices when the VAT rate was reduced.
“I will always do what is within my power but we cannot force anyone to do it,” Maric said, adding that he expected the media to help create pressure so that lower taxes materialise as higher net wages.
He noted that around 1.8 million taxpayers, more than a half, were not subject to income tax so any change in that segment did not refer to them.
He added that the situation with the state budget was “not great” and that after four years of balanced budgets this year would see a rather large deficit, which, he noted, had been compensated for to a large extent with financing activities on the domestic and international markets.
“The situation is under control but challenges still lie ahead,” said Maric, noting that the coronavirus crisis did not have to be only a problem and challenge but rather an opportunity to learn lessons and take steps that would put Croatia back on the right track, to be followed by higher growth rates.
