Prime Minister Zoran Milanovic said in Brussels on Thursday that the Croatian government had not considered raising Value Added Tax (VAT) and that there had been no mention of it.
On his arrival at an EU summit, which began on Thursday evening, Milanovic responded to reporters' questions about Croatia's forthcoming placement in the Excessive Deficit Procedure (EDP), saying that debts have to be repaid through taxes and privatisation but that taxes would not be raised.
"Someone has again made up a story that VAT is being increased. That was not discussed," Milanovic told the press on arrival at the summit.
"Croatia has to start acting more seriously than it has until now and this government has been persistently trying to act seriously and everyone of us has to realise that we are in a demanding situation but not one that we cannot come out of, far from that. We will come out of this procedure in a few years' time just like other countries," he said.
He added that apart from VAT, taxes had not been raised in Croatia.
"We don't have any larger taxes, the total tax burden in Croatia is lower, only VAT has increased and we apologise to citizens for that. That is the only thing that has grown, everything else has fallen, all other taxes are lower, a series of para-fiscal levies are lower. It is another matter, whether this is sufficient and for now we have seen that it is not," said Milanovic.
Finance Minister Slavko Linic said on Monday that in order to reduce the budget deficit it would be necessary to increase budget revenues, because there was not much room left on the expenditure side of the budget. He said that this did not mean that there would be no further cuts. Revenues can be increased by raising VAT and imposing a real estate tax, Linic said then, without ruling out either possibility.
Milanovic commented on the negotiations between the Hungarian MOL oil company and INA that the negotiations had not been terminated but just postponed.
"There has been no termination of the negotiations, they have been postponed most probably for a couple of days. They are being conducted within the government's mandate and are not public. Had negotiations fallen through, I would know," he said adding that he would not discuss this matter at the summit with Hungary's Prime Minister Viktor Orban as the matter was being dealt with by the negotiation team appointed by the government.
One of the main topics of the summit is the digital agenda which foresees that by the end of 2015 a single digital market be set up. "That means that instead of the current mass of players on the digital market, telephony and mobile phone business, only a few strong companies will be formed out of several dozen or hundreds of small companies. That sounds good, but it also sounds like a monopoly. We generally have a positive stance but also some reservations because we don't want to renounce some things that we have as a state. Specifically, we believe that we have to retain some rights and not concede these to the European Commission, that we decide on concessions and where taxes will be paid. These are all matters that relate to us and other smaller countries because we aren't the same as the Germans, Britons or French," Milanovic said.
The prime minister underscored that he did not agree with a proposed conclusion for the summit according to which EU leaders would meet again in June next year to discuss the matter of migration in light of the tragic events near the southern Italian island of Lampedusa when several hundred migrants drowned in a shipwreck. "That's unacceptable and too late, we have to do something now," he said.
Asked to comment on the dispute over the appointment of Neven Mates, a Croatian member of the European Court of Auditors (ECA) who has been criticised by the European Parliament (EP) because he did not withdraw his ECA candidacy despite the EP's negative opinion on his appointment even though he had promised to, Milanovic described Mates as an excellent candidate.
"The EU presidency voted on the appointment and said that this was strictly in keeping with the procedure and that's all I can say. Mates is no longer Croatian personnel, he works here and is paid by the EU and the Croatian government has nothing to do with that anymore," he said.
(Hina)
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