Zdravko Marić: May is the month that has the full effect of the ‘closure’ of the economy, tax revenues are half

The Deputy Prime Minister and Minister of Finance Zdravko Marić reported on Wednesday that as of yesterday, tax revenues in May were at half of last year’s, while the value of fiscalized invoices is about 18 percent lower compared to the same period last year. Responding to journalists’ questions after a meeting of the narrower cabinet of the Government, Marić stated that May is the month that has the full effect of "closure" of the economy and will therefore be the most challenging in terms of filling the revenue side of the budget. 

As of yesterday, according to data from the fiscalization system, when looking only at May, the value of fiscalized invoices is about 18 percent lower compared to the same period last year. There are differences between activities, so hospitality, despite relaxation measures and the opening of terraces, is at an index of 40 compared to the same period last year, which translates to a value of issued invoices being lower by about 60 percent, said Marić.

On the other hand, retail trade, especially food supplies, has been much closer to an index of 100 (the same level as last year), says Marić, adding that this data also serves for reflection and further decision-making. He also stated that as of yesterday, tax revenues in the fifth month are at half of last year’s.

"VAT was again in a negative absolute amount as of yesterday. This means that VAT refunds from the state budget to taxpayers were greater than what we collected. And contributions are about 25 percent lower", said Marić.

As a somewhat positive aspect regarding the coronavirus crisis and tourism, Marić points out the fact that the Covid-19 pandemic occurred and is occurring during a period when tourist revenues are still relatively low.  "But now we are entering a period when we are approaching the peak and then the situation both here and in other countries will have many effects", says Marić. When asked by journalists whether the measures related to contributions and income taxes will continue, he said that it is legally defined for three months, until June 20.

"Until June 20, you have the right to access the Tax Administration portal. So far, we have slightly more than 118 thousand requests. They have been processed, there are some duplicates, and we are generally talking about around 90 thousand that have been approved, both for April and for May," said Marić. "Thus, as of yesterday, when we talk about these deferred obligations, it is almost two billion kuna on a monthly basis. So, not a small amount," assesses Marić.

Journalists also asked Marić for a comment on today’s negotiations with unions, stating that some of the salary increases have already come into effect and that they will not be touched, while others will be postponed for a while.

"No one is abolishing them, no one is cutting them, but we are going to postpone them a bit to see how this situation will develop. That was the proposal, and it was not easy for either side to discuss this in these circumstances, but I think it is a good thing that we have that strength and that we can generate such circumstances without any drastic salary cuts. No one can predict the further development of the situation regarding the epidemiological picture, but with a certain hope and faith that there will be no deterioration, this is what we can bear as such," he said. 

Regarding the bonuses, Marić stated that there was an agreement to proceed with that payment, which could contribute to domestic demand, he said.

The Minister of Labor and Pension System Josip Aladrović stated on Wednesday that an agreement has been reached with public service unions on an addition to the basic collective agreement and on the payment of a bonus of 1,500 kuna to citizens’ accounts, rather than through the cro-card. The Government’s offer was accepted by five out of a total of 11 unions.

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