Last year, Croatia collected €21 billion in taxes "while in terms of taxing wealth, it ranks at the bottom, even though tax collection increased by 12 percent, the share of taxes in GDP decreased," state agency Hina attempted to summarize an article about fiscal policy published by the Vecernji List daily on Thursday.

Croatia collected €20.87 billion (157 billion kuna) in taxes and contributions last year. In absolute terms, tax collection jumped by around 12 percent, by €2.3 billion compared to 2020, but despite this increase, the tax revenues, measured as a share of GDP, decreased by one percentage point, to 35.8 percent of GDP.

“Croatia thus found itself in second place in a group of five countries in which the tax share in GDP fell during 2021. The relative decline in the share was mostly influenced by the strong recovery of the economy and the big jump in GDP last year… The Finance Ministry’s plans foresee a further slight reduction of the tax burden, measured as a share of GDP. This can be a consequence of tax relief or economic growth,” Hina said, citing Vecernji List.

At the EU level, the average tax share was around 41 percent of GDP, so Croatia would be in the lowest third of countries with a lighter tax burden, along with the Czech Republic and Hungary. Ireland has the lowest tax share of only 22 percent, and collects €75 billion from its 5 million inhabitants in taxes and contributions. Slovenia which is half its size collects €20.1 billion, almost as much as Croatia, while Slovakia collects €35 billion.

The structure of tax revenues in 2021 showed that Croatia’s fiscal policy is focused mainly on sales taxes, primarily VAT, while the share of government revenues from wealth and income taxes is only 5.6 percent of GDP. In the EU, 13-14 percent of GDP is collected from wealth and income taxes. Bulgaria follows Croatia with a share of 6.3 percent in taxes to GDP, the Czech Republic has 7.7 percent, Slovenia and Slovakia about 8 percent and Germany 13.5 percent.

“Only Sweden taxes spending more heavily than Croatia,” Hina said that Vecernji List said, “which is in the middle (11 percent) and below the average in terms of the share of income from social contributions.”

“Slovenians or Germans, for example, collect about 17 percent of GDP through social contributions,” Hina cited Vecernji List as saying.