Zagreb, 23 July 2009 – If the proposed Government’s measures start to apply – 3 percent tax on all income above 3,000 kuna (cca 400 EUR) and increase of VAT to 23 percent – in two or three months the state will go bankrupt, said Ana Knežević, UATUC President, at today` press conference. She also added that new taxes inevitably start a cyclic circle in which the consumption is decreased, hence also the production and overall economic activity which results with dismissals and more pressure on the Croatian Employment Service (HZZ), that is, with larger expenses for the state. She explained that the “crisis tax” was proposed by Damir Jakuš, President of Association of Workers` Trade Union of Croatia (URSH), who was at that position preceded by Boris Kunst, now a Member of the Croatian Parliament.

Knežević added that the Government obviously did not know what it was doing and did not have a perception about what to do next. The negotiations, lasting several days already, are more like bargaining at the market-place then serious discussion and negotiations between social partners concerning the Croatian reality and future. The Government has new proposals every day, but they do not bother with presenting figures, estimates or calculations about potential savings or income.

According to the calculation made by Mario Švigir, UATUC Chief Economist, the proposed “crisis tax” of 3 percent of the net wage would reduce the average wage, which according to the Central Bureau of Statistics was 5,295 kuna (cca 700 EUR) in April, for 158 kuna (cca 20 EUR) a month, or 1,906 kuna (cca 250 EUR) a year. He furthermore believes that the one percent VAT increase is risky because nobody has influence on calculation of prices of products and services. So far, the plans regarding the taxation of all other income in the country remain unclear, concluded Švigir. 

UATUC Vice-President for Economy Sector, Ivan Tomac, pointed out the fact that despite wage reduction and days off agreed between workers and employers in the real sector, about 27,000 people have already lost their jobs.

- Those thieves should be locked away and replaced, said Spomenka Avberšek, UATUC Vice-President for Public Services Sector, when commenting public companies whose debts keep growing and are rescued at the expense of the citizens. She also mentioned the local self-government, which “costs” 14 billion kuna (cca 2 billion EUR) a year.