AUGUST 20 2014 21:46h

Unions have different views of announced income tax changes

Boris Lalovac

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Croatia
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Unofficial announcements that the government plans to reduce the tax repression on citizens to increase consumption have been met with opposite reactions by the unions, with some saying this indicates a change of policy and others that token income tax changes will not significantly improve the standard of living.

 
The changes will not contribute to a visible growth in consumption because the bulk of employees would have about HRK 20 higher monthly wages, Kresimir Sever, president of the NHS union federation, told Hina on Wednesday.
 
He said the current situation in the country "is a result of a failed economic policy based on austerity and renouncing consumption."
 
Sever said the non-taxable income should be raised to at least the level of the minimum wage, as all salaries would benefit from that, whereas the announced changes would benefit the most those earning the most.
 
Before changing the income tax, he said the government should say how the resulting loss of revenue would be compensated to the local community.
 
Sever said the government must change the economic model. He said consumer optimism was crucial for consumption but that it was based on general social optimism, "of which there is none in Croatia at the moment because of fear of tomorrow and a general social depression."
 
Vilim Ribic of the Independent Union of Science and Higher Education Employees supported raising the non-taxable monthly income from HRK 2,200 to 2,600 and applying the 40 per cent tax rate to monthly salaries above HRK 13,000 and not to those exceeding HRK 8,800 as is the case now.
 
He said such an announcement was "a change in policy as it contributes to the strengthening of aggregate demand and an increase in consumption."
 
He said citizens' purchasing power should be increase to attract investments.
 
Zeljko Stipic, president of the Preporod school employees union, said the announced changes would not markedly impact the wages of 95% of elementary and secondary school employees whose salaries had been significantly cut over the past three years.
 


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