Finance Minister Slavko Linic has ruled out a possibility of lowering the Value Added Tax on food, explaining that "it is not realistic" for this year's budget.
Asked by the commercial television NOVA TV on Thursday evening to comment on announcements of presumable reduction of the Value Added Tax on some food, Linic said that any lowering of VAT would mean new cutbacks.
"When we talk about a budget for 2013 and if we opted for a lower VAT on food, we would have to decide on new cutbacks," the finance minister said, explaining that lowering VAT by one percent would mean two billion kuna less in the budget.
"Analyses are being conducted, but it remains to be seen where the difference can be covered, it can be covered only through new cutbacks," Linic said.
Asked whether workers of the Dina plant could be given their overdue salaries without bankruptcy procedure, Linic answered in the negative.
"Only with the opening of the bankruptcy procedure, the government can ensure the payment of six (monthly) salaries in arrears. We waited too long for domestic and foreign investors. The government has spared no effort to ensure the transfer of money for the payment of salaries, however investors are indecisive. Obviously, no bankruptcy procedure, no payment of salaries," Linic said.
He said that his ministry would check one more time on Friday whether there was any answer from potential investors, and in the event of no answer, "the government will initiate the procedure for bankruptcy" of that petrochemical factory on the island of Krk whose workers today disrupted traffic on Krk Bridge for one hour in protest over nonpayment of their several salaries,
Linic does not think that there could be changes of Croatia's credit rating this autumn, adding that the government's policy is to manage the budget.
"Given that the government's policy is to manage the budget and given that we collect revenues regardless of the economic downturn and that we also control the expenditures and cutbacks which we have planned, and successfully negotiate with trade unions, I believe that the correction of the economic growth from +0.8% to the zero rate cannot result in the change of the credit rating," the finance minister said.
He admitted that credit rating agencies can assess that the government failed when it come to the state-run companies' investments.
