Croatian Parties Line Up VAT Cut

by Ulrika Lomas, Tax-News.com, Brussels

16 August 2016

Andrej Plenkovic, leader of the conservative Croatian Democratic Union (HDZ), has said that his party will cut value-added tax and reform income tax if victorious in next month's parliamentary election.

As Plenkovic engaged in a verbal battle with Zoran Milanovic, head of the main opposition Social Democratic Party (SDP), in a recent televised debate, the HDZ leader confirmed that he would reverse a VAT increase introduced by the former SPD Government.

Plenkovic said he would aim to cut VAT by one percent to 24 percent during the second year of his mandate, and reduce it by an additional one percent by the end of his term.

The VAT cuts would be part of a wider plan by the HDZ to improve the tax system and reduce the tax burden on businesses and individuals. These measure would include reform of corporate and individual income tax, although Plenkovic did not elaborate on these plans.

For his part, Milanovic, Prime Minister from 2011 until late 2015, said that if elected, the SPD would also cut VAT by one percent in the second year of its term. However, he criticized Plenkovic for pledging unaffordable tax cuts, and said that an SPD Government would be more fiscally responsible, while not adding to the overall tax burden.

The September 11 election comes less than a year after previous parliamentary elections in November 2015 produced an inconclusive result.

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