MPs of the ruling HDZ party who also serve as mayors on Tuesday objected that opposition MPs have reduced the proposed tax reform to the issue of whether cities will lose a part of their tax revenue instead of thinking whether more money will be left in citizens' pockets, stressing that local budgets have grown in recent years.

“I am sad because our colleagues are not thinking about whether citizens will have more disposable income left, which is the crucial part of the proposed tax reform,” said Mato Frankovic, the HDZ mayor of Dubrovnik.

The planned tax reform envisages the abolition of local taxes and raising the personal deduction to €560, with the state taking over a part of the cost of pension contributions for citizens with low wages.

Frankovic said that his city had planned to abolish local taxes in 2024 and that in the past six years almost every city had almost doubled its budget.

Another HDZ mayor, Drazen Srpak, concurred, stressing that it was only owing to the 2017 tax reform that local government units had started to see their budgets rise.

The government is giving us the possibility to reduce the tax burden on citizens or keep the situation as it is, he said.

Tomislav Okrosa (HDZ) said that a large number of local government units do not have local taxes, and that of 556 units, 305 have had local taxes.

Conversely, the Opposition sees the abolition of local taxes as a war on the mayors of big cities who are not HDZ members, with SDP MP Sabina Glasovac saying the price would be paid by citizens.

Local taxes are the highest for those who have the most, and those funds are used to pay for public services, she said. Abolishing local taxes in Zagreb will not raise minimum wages but will jeopardise the payment of public services, she said.

Finance Minister Marko Primorac denies this, repeating that wages would grow mostly for people with the lowest income, and that the reform was not a war against mayors but an attempt to strengthen local government units and increase their fiscal autonomy.

He guaranteed that after the reform, all local government units would be able to finance their public services.

It is not fair to scare people with announcements of an increase in kindergarten fees or the price of tram tickets because the revenue of local government units has been growing constantly, said Primorac.

MP Emil Daus of the Istrian Democratic Party (IDS) said that the purpose of fiscal decentralisation was for the money made in a certain local government unit to stay there. But that is not so, he said, noting that one should consider if local government units need some other type of tax revenue.

HDZ MP Branka Juricev-Martincev warned that one should also keep account of the fact that numerous owners of holiday houses register only one room in their property for rental , paying only a lump sum income tax in an attempt to avoid paying a tax on holiday houses.

Marijana Puljak (Centre) called on the state to cede to cities ownership of state-owned real estate in their area and abolish VAT on the construction of cultural and sports infrastructure.