Zagreb Mayor Tomislav Tomasevic said on Tuesday that despite the tax reform, the residents of Zagreb will see their wages grow and that utility prices will go up neither this nor next year.

“The city will lose around €200 million due to the tax reform. After we restore the tax rate and compensate for the loss of revenue from surtax, wages will continue to grow for everyone and the tax burden will be reduced. Despite that, the City of Zagreb will lose €70 million annually,” Tomasevic told a news conference.

As part of the latest tax reform, the government has made it possible for mayors to set the income tax rate between 15% and 23.6% for lower wages and between 25% and 35.4% for monthly wages exceeding €3,981 once surtax is abolished. The current income tax rates are 20% and 30%.

In Zagreb the lower income tax rates will be 23.6% and 35.4%, which means that they will completely replace the current surtax of 18%.

Tomasevic believes it is not socially fair to compensate for the loss of €200 million annually by raising the prices of utilities, noting that they will not be raised next year either.

“We did announce an increase in utility rates but we did not implement it, we have been postponing the increase in the prices of all utility services. We have been absorbing the shock of inflation to the city budget… there have been no price increases even though expenses have increased very much. The income tax rate will be restored but the tax burden will still be smaller,” he said, reiterating that wages in Zagreb would go up for everyone, the only question being how much.

Asked what he expected of the government’s new aid measures, he said that all cities expect electricity subsidies to continue and that it was up to the Zagreb city administration to prevent the prices of utility services from going up.