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Zagreb - While the ruling HDZ's MPs on Wednesday commended the Government's bills from the fifth tax reform round, the Opposition insisted the amendments were superficial, that they would benefit the rich, and that Croatia needed a new tax model.
Finance Minister Zdravko Marić said in parliament the amended tax laws would go into force on January 1 and that the tax relief would total HRK 2 billion net.
The Homeland Movement applauds that but there will be no real tax relief, said MP Stijepo Bartulica, adding that the amendments were rather a cosmetic change when Croatia needed a new taxation model.
We are enabling over HRK 10 billion in tax relief
The fact is that with this round we are enabling over HRK 10 billion in tax relief, Marić said.
The amendments to the laws on income tax, profit tax, VAT and fiscalisation in cash transactions propose cutting the income tax rates from 24% to 20% and from 36% to 30% as well as cutting from 12% to 10% the profit tax for businesses which make up to HRK 7.5 million a year.
That is coupled with amendments to the law on local government financing, which Marić said would boost local governments' fiscal capacity and EU fund absorption.
In order to avert a reduction of local government revenue, those amendments envisage increasing the share of towns, municipalities, and counties in income tax distribution while exempting the share for fiscal equalisation, the money for which would be earmarked in the state budget.
There is money in the state budget for that and payment would occur by the 15th of the month, Marić told Anamarija Blažević (HDZ) in response to a question.
During the debate, Katarina Peović of the Workers' Front and Social Democratic Party (SDP) lawmakers proposed that the nontaxable income should be raised to HRK 5,000.
(€1 = HRK 7.5)