SDP Leader Says Croatia Will Continue to Stagnate

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ZAGREB, November 10, 2018 – Social Democratic Party (SDP) leader Davor Bernardić commented on Saturday on the 2018 budget revision, the 2019 budget proposal and the set of nine tax bills announced by Finance Minister Zdravko Marić on Friday, saying that all this showed that Croatia would continue to stagnate and there would be no reforms.

“This is just patching up holes and uncontrollable spending of money to buy votes and coalition partners, which is proved by the planned increase in expenditure of as much as 8.6 billion kuna in one year alone and the fact that expenditure will overshoot 140 billion kuna,” Bernardić said in a statement.

Bernardić said that the draft of the new budget was based on a tax reform that “actually isn’t a reform at all.” He said that all along the government had been speaking of “tax relief” while now it projected the 2019 budget revenue from taxes at over 3 billion kuna more. “What kind of reform is that and what kind of tax relief?” he wondered, noting that the currently strongest sector, tourism, was saddled with a burden of four or five new levies. “Instead of reforming the healthcare sector, the government is patching up a hole by reducing some of the contributions while at the same time increasing the healthcare contribution.”

Instead of easing the tax burden on salaries for most workers, the government has decided to increase salaries only for the 20,000 richest people in the country, namely those with monthly salaries exceeding 18,000 kuna, the SDP leader said, noting that even the Croatian Employers Association (HUP) had denied the government’s claim that salaries for IT employees would grow.

“That’s why we in the SDP have proposed increasing the non-taxable portion of salaries from 3,800 to 5,000 kuna so that wages for 600,000 workers would increase by 300-500 kuna monthly or 4,000 to 6,000 annually,” he said.

Bernardić welcomed the government’s move to increase the amount of non-taxable bonuses to 7,500 kuna, but noted that the government had actually not renounced anything in favour of workers but had left it to the discretion of employers, “so it is a big question how many of them will decide to increase bonuses for their workers.”

He accused the government of exaggerating figures about the absorption of EU funds. “Today, after five and a half years of EU membership, we have actually absorbed only 14 percent of nearly 11 billion euro placed at our disposal by the EU. This is also one of the reasons why we are stagnating in relation to other EU members.”

Bernardić said that all the budget projections would not be enough to stop people from leaving Croatia and resolve the problem of labour shortages. He also pointed out that the government had not specified what reforms it intended to implement next year and how the country would move up in competitiveness rankings.

For more on the events in SDP, click here.


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