SDP’s Economic Election Program: for Higher Salaries, Lower Corporate Tax Rate

Indirect subsidies through lower corporate tax rates for entrepreneurs who pay higher salaries and create added value, the introduction of a tax on excess profits in sectors such as large retailers, banks, and collectors, promoting innovation and investment in underdeveloped regions of the country, as well as the green transition, are the cornerstones of the SDP’s Economic Election Program, which was presented today at the party headquarters in Zagreb’s Ibler Square.

Increasing salaries and pensions, enhancing the purchasing power of average salaries, and reducing inequality are the main messages of the economic part of the SDP’s election program, authored by Professor Josip Tica and former ministers Branko Grčić and Boris Lalovac.

– In the last seven years, corporate profits have increased by 80 percent, state revenues by 33 percent, while salaries have only risen by 17 percent, and pensions have grown by a meager 10 percent. Once again, workers and pensioners have become the losers in the distribution of newly created profits – emphasized Peđa Grbin, the president of the SDP, during the program presentation, who believes it is unacceptable for the Croatian economy to rely on luck as it depends too much on tourism revenues and requires a shift towards creating well-paid jobs in all economic sectors and increasing the standard of living.

The SDP believes that the simplest way to increase salaries in the short and medium term is through reforming the corporate tax system, as they say, the space for increasing salaries through changes to income tax is quite limited and, according to Grbin, only rewards the high salaries of a small number of people. According to the SDP’s idea, entrepreneurs who raise salaries for their workers and create additional profits will pay lower corporate tax rates, while those who do not bear the burden of creating social equality will be subject to an excess profit tax.

– If you invest in your company, if you invest and raise salaries for your workers, the state will take less tax from you. On the other hand, if you, like Croatian banks, are skinning citizens alive, raising interest rates on loans and keeping minimal interest rates on savings, then we, as a state, will respond in kind and skin you alive – Grbin vividly described.

– However, the same rates will not be applicable to all sectors; we will work that out – announced Grčić, who also added that the state must use the instruments at its disposal, such as changes to corporate tax, to reduce this imbalance. If someone pays low salaries, says Grčić, while making serious profits, it is necessary to achieve a certain redistribution, and the money collected in this way can be used for social purposes or transferred from entrepreneurs to workers.

– Well, banks in Croatia are less taxed than, for example, in their home country Italy, where a conservative government is in power – emphasized Grčić, who believes that both banks and retailers and collectors must be forced to correct their margins and business practices to help the poorest.

Thus, if the SDP wins the elections and forms a government, it will invest an additional 1.5 percent of GDP in tax relief for entrepreneurs with higher average salaries through the aforementioned indirect investments from 2024 to 2027, but the state plans to spend public money on improving the innovation system and encouraging investment in underdeveloped regions of the country. In this way, they would also channel funds from EU sources.

– Investments must not be solely in infrastructure and public projects, but should be more directed towards the economy – said Grbin, who believes that funds for the green transition should be used more wisely, especially for, as he noted, purchasing machines that save electricity and create greater productivity.