Changes in income tax rates and in tax relief are likely to be on the agenda of the Croatian national parliament by the end of June, so that the enforcement of new legislation could start as of 1 July, Finance Minister Ivan Suker said on Tuesday after a meeting of the Economic and Social Council (GSV) in Zagreb.
According to the minister, a key change in the country's tax system would be the reduction of the income tax rate from 15 to 12 percent on monthly salaries of up to HRK 3,600. The government would later try to further reduce this tax rate to 10 per cent.
Abolishing income tax rates of 35 and 45 per cent is not assistance to the wealthiest, and only a very small number of people have been covered by the 45-per cent rate so far, Suker said.
The government proposes that the monthly income of HRK 9,000 be the lower limit for the income tax rate of 40 per cent, and the finance ministry is making additional analyses and is consulting with trade unions and employers on such moves, the minister said.
He went on to say that tax reliefs on incomes had so far been used only by tax payers with higher incomes, and the government also took into account the fact that tax relief abolishment would not discourage tax payers from paying contributions to voluntary pension and health insurance funds.
Those contributions will be treated in the future as business expenses, which is more favourable than it has been so far, Suker said.
He went on to say that changes of tax legislation will also be accompanied by new measures in the social welfare policy so that the system of state social welfare grants should be more transparent.
The GSV partners -- employers and trade unionists -- today supported the government's bailout Model C for loss-making companies and a proposal for amending legislation on golf courses.
They also okayed the dissolution of the economic council which was set up by former Prime Minister Ivo Sanader.
