Zagreb - The government's proposal to cut VAT on food and gas is welcome but late and insufficient, the parliamentary opposition said on Thursday, while the ruling HDZ said the cut was timely and that it would help citizens weather the price rises.
"The government's proposal is going in the right direction, but the fact is that it's late and it's not enough," Social Democratic Party president Peđa Grbin said ahead of a debate on amendments to the VAT Act whereby the government wishes to buffer the energy price hikes and protect living standards and the economy.
Grbin said the government should introduce other measures, too, and asked what it was doing to ensure incentives for enterprises so they could work in these crisis times.
Marijan Pavliček of the Sovereignists said they mostly agreed with the government's measures but asked why the amendments to the VAT Act did not go into force on 1 March.
"This blow is unbearable and the government should have reacted much sooner and much stronger," Nikola Grmoja of Bridge said, calling on the government to further cut excises on fuel.
Stephen Bartulica of the Homeland Movement said this was too little too late and that the government reacted only when it absolutely had to.
Marin Lertoić of the Istrian Democratic Party said they supported any relief of households and businesses.
Grozdana Perić of the HDZ said these amendments would help citizens weather the energy price hikes and that over the past six years the government had found solutions to crises and stabilised public finance.
The opposition fears that the VAT cuts on key foodstuffs and gas will not result in lower food prices.
Davor Bernardić of the Social Democrats said that when VAT was cut in 2018, food became more expensive.
He said foreign retail chains would have discounts for a week and then prices would soar, adding that Finance Minister Zdravko Marić would be responsible for millions of kuna ending in the pockets of foreign retailers, just as it was in 2018.
The government has proposed reducing VAT from 25% and 13% to 5% on children's food, edible oils and fats, butter and margarine, live animals, fresh meat and fish, vegetables, fruit, eggs, seedlings, fertilisers and pesticides, fodder for animals, and tickets for concerts, sporting and cultural events.
The government also proposed a 13% VAT rate on natural gas supplies and heating from power stations, firewood, and menstrual products, among other things, and a 5% VAT rate on natural gas deliveries from 1 April 2022 to 31 March 2023.
The VAT cuts are estimated at HRK 2.1 billion.