Linic announces further reduction of health contributions

Finance Minister Slavko Linic announced on Wednesday that next year the government would cut health insurance contributions by an additional two per cent, after it had already reduced it this spring from 15% to 13%.

The government will additionally reduce health contributions as part of measures to further unburden the cost of labour and increase the competitiveness of the national economy, but that will not mean less money for the health system because that amount will be compensated for by introducing a property tax, Linic said at a business lunch organised by the American Chamber of Commerce in Croatia.

The government also plans to introduce a bill on financial operations, which Linic hopes will be adopted by parliament later this year. The bill aims to solve the problem of illiquidity, which has escalated to 43 billion kuna of unpaid invoices and a huge number of insolvent legal entities. Linic believes it will take six months to remedy the existing situation.

Linic said that later this year the government would extend the deadline for VAT payments to 45 days and would thus get closer to the maximum deadline of 60 days.

Speaking of investment, Linic said that the government had realised that the crisis in Croatia was so deep that the private sector could not do much in the first year of its term in office to ensure growth, so that most of the activities would have to be launched by the government.

The government plans to invest seven billion kuna more than last year, mostly in the neglected energy sector which may increase the growth rate by two to three per cent. Linic said that that was enough to pull the country out of the recession.

"We need investors in energy and partners, and our main goal is to replace imports with domestic products. It is disappointing to see that we are left alone in this, because neither the trade unions nor the employers are following us," Linic said. (Hina)