Finance Minister Zdravko Maric has no doubt been plagued with questions about much needed reforms over the last few years, and even more so as Croatia prepares to eventually adopt the euro as its official currency and as such become a full Eurozone member. But, when will those reforms actually happen?

As Poslovni Dnevnik writes on the 18th of July, 2020, the Minister of Finance, Zdravko Maric, revealed that the reform priorities of this new Government headed by Andrej Plenkovic will involve the reform of the administration, as well as the reform of healthcare, for which, as Zdravko Maric says, the financial situation is unsustainable in its current form.

For the last weekend of July, Minister Zdravko Maric announced the first systematic write-off of tax debts, Jutarnji list reports.

"On Monday, we'll receive the data from Croatia's taxpayers for June. More than 90,000 taxpayers have asked for a tax deferral, so, we'll have a look at the numbers. If you have a drop in income of more than 50 percent in April, May, and June compared to the same period last year, you'll have the option to write off part or all of your tax liabilities either in full or in part. Anyone who has had a 20-50 percent drop will have the option of partial installment payments.

Over the last weekend of July, we're going to conduct the first systemic debt write-off. Of the 90,000 taxpayers who sought a deferral (excluding data for June), about 7,000 of them had a drop of less than 20 percent and as such, they were disqualified for a new deferral. They have already received it and the Tax Administration, as they say, will not immediately be on their backs over that. Such people will have the option of installment payments according to the criteria that existed before the coronavirus pandemic hit,'' Zdravko Maric explained to Jutarnji list.

For more on Croatian reforms, follow our politics section.

As Poslovni Dnevnik writes on the 8th of July, 2020 due to the coronavirus pandemic, the Croatian economy is among the three most affected in the EU, and the European Commission's summer forecasts are that our GDP could fall by 10.8 percent. Minister Maric said that Croatia is sticking to its estimate of a 9.1 percent GDP drop, but also announced higher salaries for about a million residents.

When it comes to government finances, Minister Maric reported that back in June, the decline in the amount of fiscalised receipts compared to June last year was about 16.5 percent. As for budget revenues, VAT in June, he pointed out, saw a plus when compared to June 2019, due to the overflow from May, so this isn't a realistic look at things, but since the beginning of the year, tax revenues have fallen by a total of between 13 and 15 percent.

The Croatian Government plans to achieve wage growth by reducing income tax rates from 36 to 30 percent and from 24 to 20 percent, which is a move residents will immediately feel in their pockets and bank accounts.

When asked by journalists whether this means that, due to the reduction of income tax, about a million residents will have higher salaries in the first year of the new government's mandate, he answered briefly: "That's right."

Economist Zeljko Lovrincevic agrees with Miniser Maric's forecast that the economic downturn should be slightly smaller than the European Commission's currently dire estimates. How the drop in GDP will affect the standard of living of Croatian residents, he says, depends primarily on whether there will be compensatory measures for the economy and employment support, and of course the question is then who will finance them. It also depends on what the wage policy will be. What is certain is that the state doesn't have much room to help the economy at this moment in time.

The aid plan is questionable...

When it comes to aid of 10 billion euros that should come from the European Union itself, Lovrincevic noted that there has been no talk of that from Europe.

''That plan hasn't been agreed. That rabbit is still far away in the forest,'' said Lovrincevic.

Economist Damir Novotny said that, if you look at the economic history after the Second World War, there were incomparably worse situations than the one we're in today. Since the 1990s, he recalls, Croatia has had a bad economic situation for a whole decade, due to the Homeland War. The economic situation, he continues, began to improve in 2002, when wages also rose, and then came 2008. As a result of the financial crisis, 150,000 people in the private sector lost their jobs. The state sector then protected itself, taxes were raised in the then-introduced crisis tax, meaning that the state sector passed practically unscathed.

Government measures are crucial

Novotny states that Croatia has had very anemic economic growth over the last ten years, but admits that the government has responded well with its various measures to try to save jobs. How this crisis will affect regular people, he says, is currently difficult to assess. He agrees that it all depends on how long the government’s measures to help the economy will last.

''The big question is how long they can last, but it's certainly not infinite. What happened back in 2009 could happen again if the government's intervention doesn't continue. Recovery must be accelerated and that's something I hope will happen, because today we're in different circumstances than we were back in 2009 because we're also now a member of the EU, where we have access to the anti-recession measures that are offered,'' noted Novotny.

He also pointed out that European Union money, which is intended to help the economy, will probably be conditioned by the implementation of structural reforms, without which, Croatia won't get its pockets filled.

Lovrincevic and Novotny both agree that the situation for Croatia would be much better if we were a member of the European Monetary Union because we would have even more measures at our disposal to help the economy damaged by the coronavirus crisis.

Andrej Plenkovic doesn't have time to wait around for the economic storm that is on its way to Croatia and he will have to quickly put together a team that will be there to face many challenges. The elections will be repeated at one polling station next week, and only after that will the final results of the parliamentary elections be announced. That's when the deadlines for constituting the Parliament and forming a new government will begin. Andrej Plenkovic can calmly wait for consultations with President Zoran Milanovic because he collected the required 76 hands in half a day. He spoke with President Milanovic on Monday, and after the announcement of the final election results, they'll contact him again to arrange a formal meeting.

It is to be expected that Plenkovic could get the mandate to form the Government by the end of next week at the latest, and then he has thirty days to form his new team. The president should convene a constituent session of the Parliament within twenty days of the announcement of the final election results, and HDZ believes that this won't be delayed and that it will occur by the end of this month.

HDZ and its partners hope that the new government will be confirmed during the first few days of August, ie, before the anniversary of Operation Storm (Oluja), on August the 5th. It was announced earlier that the Parliament, once constituted, will certainly not have a break as it has enjoyed so far, but all of that needs to be discussed and worked out.

For more, follow our politics page.

ZAGREB, July 8, 2020 - Finance Minister Zdravko Maric said on Wednesday that tax cuts were not a guarantee of higher net wages but that efforts would be made to make that happen because of the idea behind tax cuts was higher wages and higher employment and investments.

Answering reporters' questions outside the government offices about the government's plans to reduce income tax rates from 36% to 30% and from 24% to 20%, Maric recalled that the HDZ party's platform envisaged certain tax changes, adding that the party stood behind that and that they would be an integral part of the government's programme as well.

He said that the government would continue with tax reliefs, but not this year since major legislative changes regarding the taxation system always took effect with the start of a calendar year.

Maric noted that lower taxes were not a guarantee that net wages would grow because that depended on employers, and in that context, he recalled that not everyone had lowered prices when the VAT rate was reduced.

"I will always do what is within my power but we cannot force anyone to do it," Maric said, adding that he expected the media to help create pressure so that lower taxes materialise as higher net wages.

He noted that around 1.8 million taxpayers, more than a half, were not subject to income tax so any change in that segment did not refer to them.

He added that the situation with the state budget was "not great" and that after four years of balanced budgets this year would see a rather large deficit, which, he noted, had been compensated for to a large extent with financing activities on the domestic and international markets.

"The situation is under control but challenges still lie ahead," said Maric, noting that the coronavirus crisis did not have to be only a problem and challenge but rather an opportunity to learn lessons and take steps that would put Croatia back on the right track, to be followed by higher growth rates.

Croatian Finance Minister Maric has sought to assure the public in saying that Croatia's recovery from the current economic crisis we're embroiled in, induced by the coronavirus pandemic, won't be as difficult to come out of the other side of as the one which occurred back in 2008 was.

Everyone likely remembers the financial crash of 2008 and the tremendous economic consequences that followed. Many countries, particularly those with less economic strength in general struggled to make a comeback and get back on their feet after that event, and the Republic of Croatia is among those who were dealt a particularly harsh blow from which recovery took a long time.

As Poslovni Dnevnik writes on the 3rd of June, 2020 inance Minister Zdravko Maric recently stated that pensions would be paid by the time Corpus Christi rolls around, As for fiscalised receipts for the month of April, known as Croatia's lockdown month, they are in the red by 40 percent, and in May there was significant recovery as the anti-epidemic measures were loosened, seeing them stand at somewhere around 18 percent in the red.

"When lockdown started, we said that the month of May might be more challenging. From the 1st to the 31st of May, the tax revenue index stood at 48.7 which is a drop of over 50 percent when compared to middle of last year's tax levies.

It should be noted that the weekend in May was the end of the month. The numbers are better though, though I won’t try to embellish anything here either. Last year, the 31st fell on a Friday and this year the 31st fell on a Sunday, so we had two less working/business days to work with. When we include and add to the above figures what we were working with on Monday, then the tax revenue index is at the level of 60, so the decline stands at about 40 percent. Our recovery from this crisis will not be as difficult as the recovery we experienced back in 2008," Minister Maric stated.

For more, follow our politics and business pages.

As Novac writes on the 11th of April, 2020, Croatian Finance Minister Zdravko Maric commented on the government's ''minimum wage'' measures for RTL on Friday, stating that the amount being offered by the government was not the workers' full pay but merely support for wages. Minister Maric went on to make the measure more clear.

"This [measure] is payroll support. We [the government] cover that part, the rest is up to the employer to make up for if the worker otherwise has a higher salary. The salary should be as is stated in their employment contract. But if someone has run into problems, then he or she needs to solve them with the employee. That's why we have other measures, such as credit measures of liquidity,'' explained Minister Maric.

When asked about workers who are otherwise paid less than 4,000 kuna and the state pays the affected companies an amount of 4,000 kuna per worker, Minister Maric said that it would be fair for the employer to pay the worker the difference up to 4,000 kuna.

Finance Minister Maric didn't express any particular desire to talk about possible salary cuts for public sector employees amid the ongoing coronavirus pandemic, stating only that those matters needed to be discussed.

"This is a topic that we have on the table. There was a meeting yesterday. I hope that the talks will continue. We'll also invite the unions with which we've signed collective bargaining agreements. In this part, solidarity and community are important in defeating the crisis," he said.

He added that at present, the state has paid over one billion and one hundred million kuna out to employers to make up the wage differences of their employees as part of these "minimum wage" anti-epidemic economic measures. That is for more than 370,000 employees, and the total measure, he assumes, will be used by 600,000.

Make sure to follow our dedicated section for rolling information and updates on coronavirus in Croatia. For more on politics in Croatia, follow this page.

Croatian Finance Minister Maric has issued a message to Croatian panic buyers, and a similar message comes from Podravka which urges people to calm down.

Coronavirus (COVID-19) has sent people into somewhat of a meltdown, despite the numerous explanations and warnings from highly cited scientists such as Igor Rudan (which you can read here and here), that there is absolutely no need to panic. While these warnings go ignored by a significant number of people, shelves in certain shops are quickly running out of produce to fill them

Hand sanitiser and toilet paper seem to be high on the list of Croatia's numerous panic buyers concerned about the possibility of self-isolation and running out of said items.

''If any shelf ends up empty, we've got enough [products] to fill it back up again,'' stated Finance Minister Zdravko Maric in a message sent out to residents of the Republic of Croatia during a recent news conference, as Poslovni Dnevnik writes on the 13th of March, 2020.

"As far as the supply chain is concerned, there's enough of everything. Manufacturers and distributors have months to go… If any shelf is empty, there's enough to be able to fill it back up again,'' Minister Maric reassured.

"I have first hand information, we're talking about increased consumption. I repeat again: there are sufficient quantities of everything, and there will be for months to come. There's no need for excessive ''attacks'' on retail chains and the creation of additional and excessive inventory,'' Minister Maric added in an apparent warning to panic buyers who are leaving nothing for others.

"All production is working normally for us. We have several months of supplies, we've been preparing for the season so we will ensure the continuity of production, Croatia will not be left without food and medicine,'' said a statement from the large Croatian company Podravka, which also urged people to please not stockpile.

Make sure to follow our dedicated page for more on coronavirus in Croatia.

"If we've waited for years, we can carry on waiting for another few months," Finance Minister Zdravko Maric said as a guest of Dnevnik Nova TV last night, answering the question of how long it may take to analyse and implement the adjustment of pay ratios, Dnevnik.hr reports.

As Poslovni Dnevnik writes on the 30th of October, 2019, Zdravko Maric has to secure 150 million kuna for compensatory measures until the issue of coefficients is resolved, and when asked if he has the money, he says that this is not planned.

"So, as far as salaries are concerned, you'll see in the budget proposal for next year, of the total budget increase, there are two key items. On the one hand, there is one billion and 700 million kuna more for pensions and retirement benefits. And secondly, the same amount is foreseen for salaries," explained Maric.

"With regard to wage policy, we need to be very clear here. The wage increase is ahead of the proposal to increase the base. But as I said today, and I will say again now - we've opened up a very important topic that is gaining more attention in the media and among the general public," he added, referring to the topic of wages, which has been a burning one of late.

When asked how long it should take to analyse and implement what needs to be done, Maric simply stated that we have already been waiting for years and that essentially, a few more months or so shouldn't hurt.

He added that it's high time we start questioning what we're getting from our public services and noted that certain negative trends had been reversed, and that public debt is declining, that expenditures are being kept under control, that interest rates have fallen and that Croatia's rating has thus improved.

Follow our dedicated politics page for much more.

The fourth round of the tax reform by Finance Minister Zdravko Marić has officially revealed that the long-awaited Cro card will finally come to fruition, starting January 1, when other tax news should come into effect. 

Tourism Minister Gari Cappelli also confirmed the news, announcing that from January next year, employers will be able to "pay" a maximum of 2,500 kuna to workers by a special voucher, intended for consumption exclusively within Croatia and in periods outside the peak season, reports Splitski Dnevnik on July 30, 2019.

"That's right, the 'Cro Card', which will go through a public consultation with the complete tax reform, should begin in January, and we are particularly pleased with its purpose to encourage spending in the offseason, between October and April, and to stimulate consumption on the continent, although no offer on the coast will be excluded from it,” Minister Cappelli announced.

And it will work as follows: Employers will be able to pay a maximum of 7,500 kuna tax-free per worker annually, for Christmas, annual leave, bonuses and other benefits, and the tax reform will now allow up to 2,500 kuna of that amount to be paid to workers through the 'Cro card' voucher. 

In order to avoid confusion, Cappelli explained that the Cro card would not actually be in the form of a plastic card, but would probably be resolved in the form of a paper voucher, a document that each employee would be able to print out through their personal account and then use in businesses across the country.

More specifically, the voucher can’t be used in all businesses, but only those who will be included in this special program. Thus, there will very likely be unique labels on the doors of businesses so that citizens can know who is participating in this payment method.

To read more about travel in Croatia, follow TCN’s dedicated page. 

As Index writes on the 9th of July, 2019, Finance Zdravko Marić and Governor of the Croatian National Bank (CNB/HNB) Boris Vujčić expressed their joint satisfaction on Monday in regard to the reactions they've received after sending a letter of intent on entering the European Exchange Rate Mechanism (ERM II) on behalf of the Republic of Croatia. This move marked the first official step to Croatia's Eurozone entry.

They were also satisfied with the manner in which it was received by the powers that be.

MEPs from nineteen Eurozone countries and Denmark, the president of the European Central Bank and a representative of the Governor of the Central Bank of Denmark, discussed the Croatian letter of intent during a meeting in Brussels, Belgium, on Monday.

Following the meeting, the finance ministers of the Eurozone and Denmark released a statement in which they stated that "they welcome the intention of the Croatian authorities to establish the elements necessary for its successful entry into the ERM II".

Four days ago, Croatia sent a letter of intent on entry into the European Exchange Rate Mechanism (ERM II) to members of the Eurozone, Denmark and the European Union's institutions, which marked the very first formal step towards participating in the ERM II, preceded by the introduction of the euro as Croatia's official currency, replacing the kuna.

In addition to the letter of intent, the EU member states and institutions also received an encouraging ''action plan'' from Croatia, detailing the reforms Croatia promises to finally implement before entering the ERM II.

Minister Marić told reporters after the meeting said that there is still a lot of work ahead of Croatia in order to successfully complete the process of entering the Eurozone.

"We will try to finalise everything in the next twelve months," Marić assured.

In the statement from the Eurozone, it has been stated that the European Central Bank could complete its comprehensive assessment of the fulfillment of the requirements Croatia has promised to meet in its letter of intent in about a year.

In the case of a positive assessment, Croatia would enter the ERM II, in which it would stay for two years. This means that Croatia could introduce the euro as its currency in three years at the very earliest.

At the same time, upon its entry into the ERM II, Croatia would enter the Banking Union.

Make aure to follow our dedicated politics page for much more.

In conversation with Dnevnik Nova TV, Croatian Finance Minister Zdravko Marić revealed just how much taxpayers in Croatia had to pay out in guarantees for the country's ailing shipbuilding industry and the negative effects of the introduction of the euro as the country's official currency, a move which could happen in five years.

Will citizens and entrepreneurs feel economic growth? For example, will the non-taxable portion of salaries (take home pay) increase?

Entrepreneurs and citizens contribute the most to this economic growth. They create it on the one hand, and when it happens, as a result, we need to strive in the sense of measures, in order to raise the growth rates further.

To increase non-taxable parts of salaries?

It's still early to talk about the details. Salary growth has achieved positive effects. We should continue in that same direction. In terms of how much space there is [to move] on income tax, there's even more [space] in terms of the part of the non-taxable part itself. Remember the measure from December last year. More than 1.2 billion kuna was also paid by employers to their employees.

Is there any room to reduce excise duty on fuel?

You should also look at a comprehensive picture in the segment of indirect taxes. As a rule, there's always something that we have to take into special consideration because of the share of indirect taxes, Croatia is at the very top of the EU. But we should also take that into consideration in a broader context.

When you reduce fuel excise, you know for yourself that the price of everything drops.

Not as a rule always. To the last change in VAT, when we lowered taxes in our history, there's been no price reduction. But in the last couple of months, we've seen lower prices of fruit or meat, while fish and vegetables have even increased.

And in the hospitality industry by 13 percent?

This is the topic we'll also discuss.

Is the end of the issuing of shipbuilding guarantees?

This is unfortunately like in one of those ads when there's something extra at the end. I have to tell Croatian citizens that as of today, 4,420,000,000 kuna has been paid, and in the last couple of days the guarantees for the Jaružela ship, a great ship, have been protested, as well as two additional ones. Only 120.000.000 kuna is left. They're enormous sums of money. You can't be satisfied with the fact that we've paid for the construction of ships that haven't ever even been built as a finance minister or as a taxpayer.

What are the negative effects of the introduction of the euro?

Due to their very good knowledge and their history of experience with hyperinflation, devaluations before the introduction of the kuna, Croatian citizens say that in the first place, they're afraid of price increases. This needs to be taken seriously. It's a topic that doesn't happen overnight. There are several steps to take along that path. All measures must be taken to minimise any dangers and risks. And that all of the positive benefits manifest and come into effect as much as possible.

Make sure to follow our politics page for much more on the political scene in Croatia. 

Click here for the original article from Poslovni Dnevnik