The next tax reform round will be presented on Wednesday and it will certainly benefit the people, Finance Minister Marko Primorac said on Monday, adding that the only question is whether the central government will give up more or if local government units will also make a step forward in the cuts.

Speaking to the press, the minister reiterated that the reform’s key goals are additional tax cuts and increased fiscal autonomy of local government as well as real fiscal decentralisaion.

He dismissed arguments that the reform “passes the buck” to local government units, saying that the total tax burden can remain the same via income tax.

The reform envisages abolishing municipal surtax but local government units will be able to collect the maximum amount they collected thus far from income tax and municipal tax, while also being given the chance to make tax cuts.

“There are no bad guys. The City of Zagreb, for example, will be able to introduce an income tax rate that corresponds to the current one plus municipal surtax,” Primorac said.

If a town/city does not exert the option to cut the income tax rate, residents will gain nothing in that segment but they will gain from interventions into the pension system and a higher non-taxable income, he added.

“If a town or municipality thinks it can make additional cuts, it will gain even more. It will certainly gain, the only question being whether the central government will give up more or if local government units will also make a step forward in the cuts.”

Asked if the non-taxable disposable income will be increased significantly or just rounded, Primorac said “it will be rounded by increasing it a little.”

Asked what mayors told him about the abolishing of municipal surtax, he said “nothing special” and that there was no fear at all.

Asked when the cryptocurrency market will be regulated, Primorac said a number of bills and reforms were in the works. “We’ll try and compensate for a certain damage and make the situation better than it has been.”

Bill on wages in the works

The government is also preparing a bill on wages. The minister said its primary goal was to ensure equal pay for equal work.

We want to make the system simpler and more transparent and the goal is that, based on the reform, wages either stay the same or are raised, he said.

Croatian Central Bank (HNB) governor Boris Vujcic said income tax cuts were generally “a step in the right direction” given that the income tax burden in Croatia “is relatively quite high.”

Asked about the cryptocurrency market, he said the HNB had warned from the start that it was not regulated by the HNB and that one should be very careful. “We said it very clearly. If you go into that market, be ready that you might lose the amount with which you go in.”