Adriatic Institute Chairman Nataša Srdoč Opposes the Avalanche of New Taxes Proposed by Croatia’s Finance Minister Slavko Linić, SDP - Croatia's former Communist Party
Slash Croatia’s bloated government budgets - not slay Croatia's burdened taxpayer!
Rijeka, Croatia – January 6, 2012 - The Adriatic Institute for Public Policy, Croatia's independent think tank opposes Slavko Linić and SDP-HNS' economic plans which include a swath of new taxes and fails to immediately address the bloated government structure and the out of control expenses.
Moreover, the greater concern for citizens and taxpayers is the avalanche of taxes which include the VAT hike to the new high of 25% and the newly proposed taxation on capital gains, dividends tax and property taxes.
The newly announced property tax will force owners to sell their properties for bargain prices in the worst possible economic conditions since the vast majority do not have disposable incomes to cover property tax payments. Furthermore, bankruptcies will skyrocket. Linić's introduction of the new property tax in the worst economic conditions will have detrimental and far-reaching consequences for a great number of Croatian citizens.
It should be noted that there were serious allegations made against the current Finance Minister Linić, whereby, during his role as then-Deputy Prime Minister for Economic Affairs in Mr. Račan’s administration, Slavko Linić through illegal actions allowed the Hypo Alpe Adria Bank to make exorbitant profits through questionable and non-transparent deals.
According to the report which was published by Nacional in 2010:
“The Hypo Bank acquired a number of very valuable pieces of real estate, and according to the assertions made in the report, the bank came into possession of the bulk of these pieces of real estate by buying cheap agricultural land that was later re-zoned into commercial or residential land, or by assuming ownership over failing companies situated on land in attractive locations. According to the report, Hypo Bank had the support of representatives from both state and local units of government in both models, primarily on the basis of the good personal relations between the bank's top officials Linic, Jakovcic and other people from the highest levels of state politics.”
A prudent fiscal policy would reduce Croatia’s out of control government expenditures. Instead, SDP-HNS fiscally irresponsible policies are focused on killing the economy and consumers' confidence by increasing taxes. The government should create favorable economic conditions for property owners to use their properties in a productive manner. It is only when property owners have opportunities to use their properties productively - will they be able to pay property taxes. Therefore, the Adriatic Institute highly suspects Linić's expertise, intentions and personal motives.
The nation's high unemployment rate of nearly 20%, youth employment of over 40%, the major drop in FDI and lack of new job creation poses greater concerns for Croatia’s citizens.
These new imposed taxes and fees will result in lower tax revenues, tax avoidance, tax evasion and increase the already large grey economy.
It is time to slash Croatia’s bloated government budgets and not slay Croatia's burdened taxpayer! The only way Croatia can reduce its public debt (60% of GDP) and foreign debt (104% of GDP) relatively as well as absolutely is through economic growth.
Economic growth is achieved through creating a favorable business environment for investment, new employment and higher personal consumption. The government should focus on reducing government expenditures and allowing the economy to grow. The new taxes will deal a heavy blow to the economy on the brink of disaster and directly hurt businesses and consumers.
Croatia's SDP-HNS coalition government has begun a process which exhibits utter fiscal irresponsibility and perpetuates corrupt practices which have wracked Croatia’s economy.
Nataša Srdoč, MBA
Co-Founder and Chairman, Adriatic Institute for Public Policy