The Croatian Employers Association (HUP) strongly opposed government's announcements of taxes which would raise cigarette and alcohol prices by about 50 percent, saying this could result in losses for tobacco and alcohol producers and the state budget as well as layoffs.

Introducing preventative taxes through amendments to the Compulsory Health Insurance Act is unacceptable, as it will jeopardise jobs in the tobacco and alcohol industries and encourage black market sales, said HUP director general Davor Majetic in a press release on Wednesday.

He added that the new taxes would not do anything to solve the problems in healthcare, nor would they significantly reduce alcohol or tobacco consumption.

The Croatian economy as a whole is already overburdened with taxes and other levies, which has a negative impact on the companies’ competitiveness, he said.

Besides, tobacco and alcohol producers already pay high excise taxes, so any new tax can undermine their operations and result in major layoffs, Majetic added.

Observing foreign markets shows that high prices do not encourage a healthier lifestyle, but would sooner foster the growth of the black market, which would ultimately cost the state significant profits, which makes this decision counterproductive, HUP said.

Different, long term and more comprehensive measures are necessary to raise awareness of the need for moderate consumption, and healthcare problems should be resolved through an integral reform which will cut costs, they added.

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