Prime Minister Andrej Plenkovic said the objective of the pension reform was to have a balanced system with higher pensions and prosperity for future generations, saying that the government had found optimal solutions.
This is one of the key structural reforms, Plenkovic said, recalling that one of the biggest challenges of the pension system was the fact that an average pensioner had only 30 years of service.
"Only 30. If we were in Germany, it would be 37 or 38 years. This is a significant difference," Plenkovic said adding that the consequence of that was a deficit of HRK 17 billion kuna. The PM also said that only 19% of Croatian pensioners retired with the maximum working life.
He also said that the reform was designed to help achieve sustainability of public finances and a fairer pension system as well as consolidate the second pension pillar.
Labour and Pension System Minister Marko Pavic said that pensions would increase next year, noting that people with the minimum pension would be eligible for a 3.13% supplement.
The government at its session on Friday adopted three of a total of 217 amendments to the draft 2019 budget and four amendments referring to extra-budgetary users and submitted two of its own amendments.
Finance Minister Zdravko Maric said at the session that of the total of 217 amendments, the government adopted three amendments referring to the state budget and four amendments referring to extra-budgetary users -- the Hrvatske Ceste road operator.
Adopted were amendments submitted by MPs Marija Pug Sipic and Zarko Tusek, worth HRK 10 million and two amendments submitted by MPs Pero Cosic, Ljubica Maksimcuk and Marko Simic, worth HRK 15.5 million,
Furthermore, the government adopted amendments to a draft financial plan for Hrvatske Ceste for 2019, submitted by MPs Vesna Bedekovic, Josipa Djakic, Vladimir Bilek, Zeljko Lackovic, under which additional HRK 37 million would be secured in 2019 for building and updating fast roads.
The government submitted two of its own amendments. The first one refers to the development of assisted areas, namely parts of Croatian territory that are behind in development in comparison to the Croatian average and therefore need additional development support.
The second one proposed a redistribution of HRK 4.1 million to the Education Ministry for the purpose of securing funds for the Hrvatsko Zagorje-Krapina Polytechnic.
The amendments are expected to be discussed in parliament later in the day.
The government on Friday sent an accounting bill to parliament which foresees the abolishment of licences for accountants as of 1 January next year.
The amendments to the law have been put on fast track so as to facilitate its entering into force as of 1 January.
Finance Minister Zdravko Maric underscored that the main reason for the law being amended is in fact to abolish accountants' licences. This will prevent additional costs which accountants usually added when charging small and medium-sized businesses for their accounting services, Maric explained.
Accountant licences were introduced in 2015 for those cases where entrepreneurs entrusted someone to conduct the business of accounting to another legal or physical entity, in which case the accountant had to be licensed to do so pursuant to a special law.
The proposed amendment will align the law with the Audit Act and will remove any overlapping between the two acts.
Maric stressed that the amendments will additional relieve entrepreneurs and enable accounting documents to be kept in electronic format.
The government on Friday endorsed a regulation to increase excise tax on cigarettes that will raise their price by HRK 2 a pack and on vehicles in an effort to prevent a possible price hike on cars following the introduction of new EU measures on exhaust fumes.
Presenting the excise tax on cigarettes state secretary in the Finance Ministry Zdravko Zrinusic said that the price of a packet of cigarettes should not increase more than HRK 2.
The regulation aligns the minimum excise duties on cigarettes with EU Directive 2011/64/EU which requires Member States to levy a minimum rate of excise duties on cigarettes. This minimum rate must consist of: a specific component of between 7.5% and 76.5% of the total tax burden (TTB) - expressed as a fixed amount per 1000 cigarettes.
The regulation determines that the excise duty be increased from HRK 310 to HRK 335 for 1000 cigarettes while the proportional duty will remain at 34% of the retail price. The regulation enters into force on December 3
Additional reduction in value components on vehicle tax proposed
The government also endorsed a regulation regarding a special vehicle tax that will enter into force as of 1 January.
Zrinusic explained that the regulation will reduce the burden of the value component of the vehicle tax and introduces an excise duty on CO2 emissions per kilometre.
That means reducing the value component in order to reduce the tax burden on vehicles. A reduction of 6.8% is planned in the first phase or about HRK 97 million, and if the trend of vehicle purchases continues as it is now that could mean a reduction of HRK 350 million in tax breaks, Zrinusic explained.
The regulation means that the value component of vehicle tax would be reduced from HRK 4,500 to HRK 3,500 for vehicles valued by between HRK 200,000 and HRK 250,000.
Vehicles classified as category I and 2 with a value up to HRK 150,000 will still not be required to pay the value component while the third category of vehicles valued between 150,000 to HRK 200,000 would remain at the current HRK 2,000.
Early October, Finance Minister Zdravko Maric announced that he would try and buffer any possible price hike on the cost of vehicles due to the new way exhaust fumes are measured as set by the EU.
The government on Friday decided to sell its share in a former army singles dormitory - Hotel Iz - in Zadar, for HRK 11.47 million and issued a government guarantee for the Split-based Jadroplov shipping company for a loan in its restructuring process
The call for bids for the state's share in the 4,399-square-metre-large Hotel Iz, at a starting price of HRK 6.6 million was advertised early August.
Four bids were submitted and a recommendation has been made for the government to accept the most favourable bid submitted by the Zadar-based "Hostel for you," company of HRK 11.47, state-secretary in the State Assets Ministry, Tomislav Boban said.
The government endorsed amended conditions for a loan of HRK 720.9 million taken from the Croatian Bank for Development and Reconstruction (HBOR) by the Hrvatske Ceste road authority and that was guaranteed by the government.
According to Minister of the Sea, Transport and Infrastructure Oleg Butkovic, the amended conditions mean reducing the interest rate of 4% to a fixed annual rate of 2.5% and the extension of the grace period from 31 March 2019 to 31 March 2022.
The government further endorsed a state guarantee to the Jadroplov company for a loan from the Hannover-based Norddeutsche Landesbank Girozentrale, as foreseen in its Restructuring Plan fro 2015 - 2019.
State-Secretary in the Finance Minister Zdravko Zrinusic explained that the financial collateral provided by the state was a constituent part of the restructuring plan that was approved by the European Commission.
Text: Hina