Reduce the Tax Burden on Citizens

Combating inflation and stabilizing the economy is possible by aligning monetary and fiscal policies, reducing public spending, increasing activities on measures to enhance and stimulate production activities, and reducing taxes and contributions, it was stated today at the HNS round table “What Should Real Measures to Combat Inflation in Croatia Look Like”.

Participants of the meeting agreed that it is šurgently necessary to adopt concrete measures to combat inflation, and they need to be implemented šas soon as possible since citizens are the only ones bearing the burden of inflation through a reduction in real wages. Currently, the economic situation in Croatia is determined by inflation and stagnation of economic development, it was warned at the meeting. "Croatia is currently in a state of stagflation, and with this gathering, we want to offer the public and the government a more comprehensive view of the stagflation crisis and how to exit it," said HNS leader Radimir Čačić. The capacity to reduce inflation exists within the government, emphasizes Čačić, highlighting that political will is needed to make essential strategic decisions.

Čačić sees room for reducing inflation in setting priorities and transparency in capital investments, which he estimates at 16 to 17 billion (budgetary plus off-budget). "I assert that if this block of capital investments were offered to any sufficiently strong company to realize them, there is not one that would not immediately accept to realize them in full for 20 to 25 percent lower prices, within the same deadlines and with the same cost of capital," said Čačić. This amounts to approximately 4 billion kuna annually, which significantly affects the level of inflation, emphasizes the HNS leader.

Advisor to the President of Croatia for the economy, Dubravko Radošević, warns that there are no simple solutions for controlling inflation, advocating for the rationalization of public expenditures, a restrictive monetary policy, and control of systemic risk in Croatia’s financial sector. Economist Velimir Šonje believes that price relationships have permanently changed. "Real prices of food and energy have skyrocketed, perhaps forever," warns Šonje, emphasizing that productivity must increase in Croatia, and he also advocates for an analysis of capital investments.

Dragan Kovačević from the Center for Economic Development emphasizes the need to propose a global solution. "It must be determined what the priority is," he stresses, assessing that the basic measure is to stimulate production. "Zagreb is increasingly a trading city and a city of warehouses, while production is moving outside the city," Kovačević points out as an example. All participants of the round table emphasize the need to reduce the tax burden on citizens. "The pressure on the ordinary person, through taxes and contributions, is too high," warns Kovačević, stressing that the state must reduce taxes and contributions so that the ordinary person "has more left for the minimum of living needs." The problem, he warns, is that a large percentage of the population is already on the brink of minimal consumption. (H)