Gov’t promises new tax allowances for citizens


Deputy Prime Minister Branko Grcic said on Saturday that more tax reliefs may be introduced to encourage personal consumption and consequently economic growth.

“In the coming period, you can expect this government, that is the Social Democratic Party (SDP), to make a new step aimed at raising citizens’ salaries and introducing new tax allowances. They should help revive personal consumption and economic growth,” Grcic told a news conference convened after the national statistical office stated on Friday that Croatia’s GDP had increased 1.2% in the second quarter of 2015 year-on-year.
Q2 GDP rose on the back of positive contributions of all its components, including personal consumption, exports, government consumption and investments. Personal consumption, the largest component of GDP, increased 0.6% in Q2 2015 compared to Q2 2014, and Grcic ascribed this to tax allowances introduced earlier in 2015. As a result, salaries of a million Croatians rose, thus facilitating personal consumption, he explained.
Grcic boasted that investments had also increased in Q2 2015, for the first time since 2008, thanks to better absorption of EU funds. Investments increased by 0.8%, according to the statistical office.
According to a recent European Commission financial report, Croatia absorbed 173.6 million euro more in 2014 than it contributed to the EU budget. The surplus was significantly higher than in 2013 when it amounted to 49.6 million euro. In the first half of this year Croatia received 2.8 billion kuna, while last year it received 1.1 billion kuna from the EU funds.
Grcic said that the the absorption increased thanks to the government’s efforts, thus countering the remarks from the opposition that the economy grew by inertia rather than as a result of the government’s efforts.