Croatian Prime Minister Jadranka Kosor said after talks with trade union leaders on Monday that a forthcoming budget revision would not include cuts in salaries and pensions, but that the government would increase taxes on petrol and tobacco on Tuesday.
By using different measures the government has reduced the budget by 1.5 billion kuna, and tomorrow it will adopt a decision to keep all spending in 2011 at this year's level, Kosor told reporters outside the government headquarters.
"Along with the 2011 budget, we will also adopt a law on fiscal responsibility to introduce rules of conduct for future governments and parliaments," Kosor said.
She went on to say that the budget revision would have to secure an additional 340 million kuna for pensions, 800 million kuna for the unemployed and farmers, around 300 million kuna for damage caused by natural disasters, 100 million kuna for maternity allowances, and 170 million kuna for a referendum on changes to the Labour Act.
The PM added that the government would not raise excise duties on diesel fuel to prevent some other prices from going up.
The government will continue talks on a union proposal to introduce taxes on banks and other financial institutions with leading commercial banks and the central bank's governor, Kosor said, adding that efforts would continue to distribute the burden of the crisis evenly.
The coordinator of trade union federations, Ozren Matijasevic, said after the talks that unions supported the budget revision as proposed by PM Kosor because it did not envisage cuts in salaries and pensions and farm grants.
"We are satisfied because most citizens will not be harmed by the budget revision," Matijasevic said, adding that one should look more closely into the possibility of introducing taxes on banks' assets.
Under the proposed budget revision, the budgetary deficit should account for 4.5 percent of GDP, union leaders said.
The government will adopt its draft budget revision at a session on Tuesday.
