One should not view everything as punishment, but in the context of more integrated policies – responded Minister Branko Bačić two years ago in an interview with Lider regarding empty apartments and the introduction of property tax. That the Minister of Construction is more inclined towards carrots rather than sticks is evident from the recently adopted National Housing Policy Plan of Croatia (NPSP) worth two billion euros and the announced amendments to the Law on Socially Supported Housing, which aim to address the problem of high apartment prices precisely through new incentive measures.
The stick that has arrived from the ‘kitchen’ of Finance Minister Marko Primorac, the property tax, has also been considerably diluted from idea to realization, making it unlikely that anyone will tremble before it. Except perhaps for HDZ parliamentary representative Pero Ćosić, who, despite having assets worth one million euros, recently complained about having to pay an annual tax of 190 euros for an apartment in Zagreb.
Initially, it was announced that the highest tax rate would be ten euros, but it was later reduced to eight. Nevertheless, in the run-up to local elections, only six cities and municipalities decided to apply that maximum amount. Hosts who rent out apartments to tourists while living in the same property have ultimately been exempted from paying property tax. Additionally, taxpayers can avoid further burdens by registering a family member at another property they own. Due to these exemptions, it is increasingly likely that the new tax will not reach the planned two hundred million euros in revenue and will affect more taxpayers. Therefore, the impact on the housing market from these financial housing policy measures will not be significant.
Dilution of Ideas
Although it is commendable that a national housing policy is being adopted for the first time, many good initial ideas have been diluted before its acceptance, and the state has turned to populist measures. This category certainly includes the measure of refunding half of the VAT when purchasing a new apartment for individuals under 45 years of age, which again, like subsidized APN loans, stimulates demand. Previous APN incentives could only be used for purchasing an apartment with a housing loan, while the new measure allows those with sufficient cash in their accounts to apply for state support for purchasing an apartment. Citizens with high incomes can also apply for support because the state has not stipulated any income criteria.
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