ZAGREB, September 11, 2019 - In negotiations on wage increases for healthcare workers the government is not neglecting teachers or other public-sector workers, Finance Minister Zdravko Marić told reporters ahead of an inner-cabinet meeting on Wednesday.

"We are not neglecting teachers or other services. We will continue talks. The situation is specific in that the collective agreement for teachers lasts for another three years while that for healthcare workers has expired. I should recall that ten days ago the base wage was increased for all by an additional two percent. We are ready for further dialogue," Marić said.

He said that all demands for wage hikes were challenging. "We cannot ignore not just the challenges but also our priorities and the possibilities that we have. It is not good to jeopardise public finance with a measure, and these individual matters should not lead to such circumstances."

Asked if wages would be eventually increased for all public-sector employees because of the forthcoming elections, Marić said he did not know. "We are pursuing a good dialogue and policy that is ultimately trying to detect challenges and problems and we are trying to rectify certain things. If someone thinks that everything is down to the lack of finance, that's not true."

Marić said that the government needed to ensure that all financing was in line with the budget and that that was its obligation to taxpayers.

More economic news can be found in the Business section.

ZAGREB, September 2, 2019 - Finance Minister Zdravko Marić said on Sunday the changes to income tax rules entering into force would give employers an additional possibility to raise their employees' salaries.

"All the changes are in line with what we have been announcing," he told reporters.

He said the pay rises would eventually mean higher living standards and that this was in line with the changes made in the previous three tax reform rounds, notably the last one from the end of 2018, when the non-taxable amount for bonuses was raised from 2,500 to 7,500 kuna.

The minister said this was not coercion but just an option for employers, adding that this was a contribution by public finances and the fiscal policy to raising salaries in the business sector.

The latest non-taxable earnings refer to meals, accommodation, day-care, holidays, and per diems. Marić said that as of January 1, health insurance contributions would also be non-taxable.

Asked if he was confident that employers would utilise these tax breaks, the minister said he believed that a large number had a very positive view of this option as they could raise their employees' salaries without being subject to any additional tax burden.

He said payments for non-taxable bonuses, which went into force last December 1, reached 1.25 billion kuna that month alone, covering 471,000 employees. He added that this option was in force this year as well and that 850 million kuna had been paid until now.

Asked if the state would utilise these options, Marić said the current focus regarding public sector workers was on the base pay. He added that for now the government was paying them 2,500 kuna in non-taxable holiday and Christmas bonuses.

Asked about a strike announced by medical staff, he said negotiations were under way with unions "and we'll see where and in what way this will all go."

The government believes that employees deserve higher incomes, he said. "Just as it was the case in the private sector, we can't ignore the fact that the options are limited," he said, adding that one must consider the state budget and public finances and "balance" accordingly.

More news about taxes can be found in the Business section.

ZAGREB, August 27, 2019 - After on Tuesday the Ministry of finance auctioned off 32 million euro in treasury bills, at a negative interest rates of - 0.05%, Finance Minister Zdravko Marić welcomed the fact that the treasury bills were issued at a negative interest rate.

This is the first time Croatia issued treasure notes at a negative interest rate and Minister Marić hailed that as good information.

Earlier in the day the ministry issued treasure bills for 81 million kuna with a maturity of one year and at an interest rate of 0.01 percent, which was down by 0.01 percentage point lower than last week's auction.

The ministry issued also treasury notes for 32 million euro with a maturity rate of a year and at a negative interest rate (-0.05%), which means that financial institutions will actually pay the Finance Ministry to keep their money in the form of those securities.

These transactions were conducted ahead of the maturity of treasury bills worth 199 million kuna and 50 million euro.

The balance of the treasury bills issued in kuna will be reduced by 118 million kuna to 17.84 billion kuna.

The balance of the euro-denoted treasury bills goes down by 18 million to 100.6 million euro.

More economic news can be found in the Business section.

ZAGREB, August 20, 2019 - The Croatian Ministry of Finance on Tuesday auctioned off nearly 1.19 billion kuna in treasury bills, which was more than planned, still at low interest rates.

The ministry had offered 1 billion kuna worth of treasury bills for subscription ahead of the maturity of treasury bills worth 1.15 billion kuna. It received offers for 1.18 billion kuna and accepted them all.

The bills were issued for 1.17 billion kuna with a maturity of one year and at an interest rate of 0.08 percent, which is the same percentage point as at the previous auction at the end of June. Furthermore, 200 million was auctioned off with a maturity rate of six months at an interest rate of 0.05 percent.

The balance of the treasury bills issued will be increased by 36 million kuna to 17.96 billion kuna.

The next auction is set for August 27 via Bloomberg's auction system (BAS).

More economy news can be found in the Business section.

ZAGREB, August 15, 2019 - The government will secure funds for a previously agreed 2% increase in the base pay of civil servants and public service employees, to go into force on September 1, Finance Minister Zdravko Marić told Hina on Wednesday, stressing that the government had a horizontal approach to civil servants and public service employees and treated them equally.

The minister recalled an agreement with trade unions from 2017 when the base pay was increased in three rounds by slightly more than 6%.

That dialogue continued and in 2018 and 2019 an additional increase of 3% was agreed for January 1, 2019, he said, adding that unions also asked for an additional, 2% increase as of September 1. The government said at the time that it did not have the necessary funds but that it was willing to accept the unions' demand if savings were made on other budget items, said Marić.

"That is what we have been working on, what we accepted as an obligation and we will honour it," he said, adding that most ministries did not have funds for a 2% increase in the base pay of their employees but that the government would honour the deal with trade unions and increase the base pay by 2% for all civil servants and public service workers.

Marić underlined that the government treated all civil servants and public service employees in the same way.

"With all due respect, but employees in the health and education sectors cannot be singled out from other services," he said.

Asked to comment on media reports that he was angry because doctors and teachers were promised a salary increase without consultations with him, Marić said that his communication with former labour and pension system minister Marko Pavić and his successor Josip Aladrović had been very clear and that all ministers should be involved in talks on raising the salaries of civil servants and public service workers.

More economy news can be found in the Business section.

ZAGREB, July 25, 2019 - Addressing reporters after a cabinet meeting in Čakovec on Thursday, Prime Minister Andrej Plenković announced a press conference for Friday where the fourth round of the tax reform, i.e. new tax reliefs for entrepreneurs and citizens, would be presented.

Asked by reporters when would citizens feel the benefits of 200 kuna to 300 kuna more in their pockets, Plenković said that it was necessary to see what the average wage is today and how much it was when his government started working.

"Have a look at the minimum wage, the rate of employment, the decreased unemployment, economic growth, the investment rating, tax and administrative reliefs, and the HRK 8.5 billion surplus," Plenković said.

He agreed with the claim that young people were emigrating every day, even those who had jobs in companies that exported their products and were doing well, announcing that part of the reliefs would be directed at young people, those who have just left the education system and entered the labour market, with the aim of reducing the tax pressure on them as much as possible.

"As far as the overall economic growth and increasing wages is concerned, not one government can do that overnight. All the trends over the past three years have been positive, both in terms of wage and economic growth," he said.

Free movement has enabled something our citizens could not utilise before, Plenković said and added that Croatia is experiencing the same thing that central and eastern European countries did in the first few years of absolute liberalisation, they had emigration trends which then decreased and stabilised.

"The same thing will happen in Croatia," he said, claiming that "we will soon see how significant that impulse was to development."

By raising the standard of living, fewer people will want to emigrate, he added.

More news about taxes can be found in the Business section.

ZAGREB, July 12, 2019 - The CEOs of ten leading Croatian companies met with Finance Minister Zdravko Marić at the Croatian Chamber of Commerce (HGK) on Thursday regarding a fourth round of tax reform, saying that without tax cuts it was not possible to increase wages and competitiveness.

"A decrease in income tax and raising the non-taxable amount on allowances (accommodation, transport and meal allowances for employees) were the primary demands by entrepreneurs," the HGK said in a press release, adding that they also talked about overtime work and reducing the profit tax.

The HGK has for years been articulating the demands and problems of entrepreneurs, and this was a continuation of the dialogue between the state and entrepreneurs, HGK president Luka Burilović said.

"The situation is alarming. There is a chronic shortage of labour force, which in turn requires higher wages. Companies can no longer afford to finance such increases with reduced profits as that seriously impacts their investment and development potential and hence the sustainability of their business. That's why future tax changes need to be aimed at relieving the burden on labour," Burilović said.

Minister Marić explained that the fourth round of the tax reform "is still in the analysis stage." He added that talks were being held with all stakeholders and that "wishes are one thing while reality is another." The aim is to further relieve the economy both administratively and financially, he underlined.

More news about taxes in Croatia can be found in the Business section.

ZAGREB, July 10, 2019 - Commenting on demands by restaurant owners for a VAT cut so that they could become more competitive, Finance Minister Zdravko Marić said on Wednesday that prices, too, were important for their competitiveness.

"If we look at VAT alone, we can see that we have higher rates on hospitality services than some other Mediterranean countries, but if we look at price competitiveness, the question is not the VAT rate but prices that we have overall," Marić told the press after a meeting of the inner cabinet.

He said that as part of changes to the tax system a great focus was put on small and medium enterprises and that most of restaurant owners belonged to this sector.

Marić said that within the next three months his ministry would seek additional measures to improve the tax system and make it more competitive, which should provide an incentive to taxpayers and the enterprise sector.

"We will certainly discuss the VAT, but it's too early to make any conclusions," the minister said.

The association of restaurant owners presented a list of demands to the government on Wednesday, including a demand to cut the VAT rate on food preparation and serving from the present 25 to 13 percent.

Marić said the European Commission's revised forecast of Croatia's economic growth this year was a positive thing, adding that it was necessary to keep it up. "That's a positive thing for Croatia and for everyone who wants and likes to invest in Croatia, but I think it's important that we continue on this course that we have set, in terms of everything we can do to facilitate economic growth in Croatia," the minister told reporters.

He said that although quarterly or annual economic growth was important, it was necessary to keep it up.

The Commission today revised its forecast of Croatia's economic growth in 2019 to 3.1% from the previously estimated 2.6%.

Marić said the revision for Croatia was among the three biggest forecast revisions in the EU, alongside those for Hungary and Romania. He attributed Croatia's revision to the 2.9% annual growth recorded in Q1.

He said Croatia's key challenge with regard to economic growth was to raise the contributions of labour and productivity, given that capital was giving good results. There is enough room for progress on that front, he added.

Marić said Croatia could have better results in industrial production and some other activities.

More news about Croatia’s tax system can be found in the Business section.

ZAGREB, July 3, 2019 - Finance Minister Zdravko Marić said on Wednesday that Croatia would soon send in a letter of intent to join the Exchange Rate Mechanism (ERM II), a sort of waiting room for eurozone entry.

"In the letter we will specify things that we plan to fulfil in the next 12 to 18 months and then we will see what comes next," Marić told reporters ahead of a meeting of the National Council for the adoption of the euro as legal tender in Croatia.

"The better we do our homework, the better the effects for all Croatian citizens," he added.

Maric recalled that the government had recently sent a letter to the European Central Bank seeking close cooperation, and that the next move was a letter of intent to join ERM II.

Asked if there would be enough money in the budget for the purchase of new aircraft for the Croatian Air Force, he said: "This matter is not disputed, but everything has to be in accordance with the country's priorities and financial means."

Commenting on demands by restaurant owners for a lower VAT and higher wages, Marić said that the tax system would be thoroughly analysed and any tax changes would come into force on January 1.

He did not specify whether the account of the troubled 3. Maj shipyard would be unblocked, saying only that it was one of the issues that would be discussed further.

More news about the introduction of euro can be found in the Business section.

ZAGREB, June 20, 2019 - Croatian Finance Minister Zdravko Marić on Wednesday announced a fourth round of tax cuts in accordance with the country's fiscal capacity, saying that each previous round had benefited citizens, businesses and the government budget itself.

Speaking in an interview with the RTL commercial television channel, Marić said that the task force set up for this purpose in 2016 would meet within the next few days to exchange opinions, adding that a public consultation would be held during the summer break to present new measures aimed at relieving the tax burden on businesses.

"We have been reducing taxes for three consecutive years, and it is only logical that citizens and businesses expect us to continue down this road," the finance minister said. He noted that in the last three years the budget had been balanced, public debt and interest rates reduced and the country's credit rating upgraded.

Marić said that everything would be done to increase personal incomes as well. "As for reducing the tax burden on labour and profit, I think we have positive effects here," he said, stressing that they always look at the tax system in its entirety.

Commenting on the proposal by the opposition Social Democratic Party (SDP) that the non-taxable portion of personal income should be increased from 3,800 kuna (513 euro) to 5,000 kuna (675 euro), Marić said that during the term of the SDP government net wages had increased by about 230 kuna (31 euro), while in the last three years they had risen by over 700 kuna (95 euro).

He said that a real estate tax would not be introduced next year.

More news about taxes in Croatia can be found in the Business section.