Linic: No major changes to tax policy next year

ZAGREB, Sept 28 (Hina) - There will be no substantial changes to tax policy next year, Finance Minister Slavko Linic said at a meeting of the Exporters' Club in the head office of Croatian Postal Bank (HPB) in Zagreb on Friday.

The government cannot go for any substantial tax cuts in order to ease the burden on enterprises because that would increase the deficits. Our aim is to continue to reduce the cost of labour and make additional savings by reducing the fees for market regulators, Linic said.

He dismissed accusations that the government had further burdened the industrial sector with taxes, recalling that the health contribution had been reduced by 2%, the law on the representativeness of trade unions and employers had been passed, making the labour more flexible, some of the parafiscal duties had been reduced, the price of electricity for the industrial sector had remained unchanged, while the price of natural gas had gone up because of INA's monopoly. He added that he believed that the price of gas would also drop by the end of the year.

The only major change next year will be the introduction of property tax to replace local rates, which will increase the revenues and liquidity of local government units, the minister said.

Responding to questions from the exporters, Linic said it was possible that they would be exempt from paying retained profit tax next year, which would help them consolidate their working capital and increase their competitiveness.

Linic said that the government's biggest problem was stimulating economic growth, because without growth austerity measures alone could not produce desired effects. He noted that growth could not be based on increasing exports because the competitiveness of Croatian exporters was still not at the necessary level, while at the same time the euro zone was in a serious crisis.

Our struggle for growth is based on reducing imports, while at the same time we are struggling to reduce the deficit and cut costs so as to obtain a better credit rating, Linic said.

HPB today unveiled a new credit line for exporters with an interest rate of 4.75% in kunas, with and without the foreign exchange clause, and in euros. The repayment deadline is 10 years with a possible grace period of up to two years.