zdravko marić.jpg
Photograph: HINA/ Damir SENČAR /ds

Finance Minister Zdravko Maric said on Thursday that there would be no changes to the tax system this year but that after a detailed analysis, to take four to five months, an integral solution could be found for the reform of the tax system.

Addressing a seminar held at the Croatian National Bank (HNB), Maric said that the recession in Croatia had significantly restricted economic activity and drastically reduced the tax base. The response to that were too extensive interventions in the taxation system, which is now too complicated, Maric said.

"Now we are not ready for that, but after an analysis is done, in about four to five months, I believe that we should be ready for an integral solution for the tax system," said Maric, adding that he was not in favour of any radical solutions.

Commenting on the budget for 2016, which the government is expected to discuss next week, Maric said that guidelines for its drafting were criticised as being both insufficiently ambitious and overly ambitious, which he said was proof that he was on the right track.

He singled out again public debt as the main macroeconomic risk for Croatia, notably its current growth dynamic, saying that in such circumstances fiscal policy should give an answer as to how to stabilise the debt and how to reduce it.

"I believe that already this year... we will be able to help directly reduce public debt, with the message of fiscal consolidation of below three percent and with the activation of state property. As early as this year we expect its growth to stabilise, to be followed by its gradual reduction. The dynamic will not depend only on fiscal policy but it is important to reverse that trend," said Maric.

The adoption of this year's budget will only be the first step, to be followed by the real job - dealing with numerous structural weaknesses of the national economy, said Maric.

Speaking to reporters after the seminar, Maric again would not comment on the budget in greater detail, saying only that it would be "more or less in line with the guidelines."

"The limits will be as those set, and as to whether there will be slight changes or corrections for specific budget items - maybe," he said.

The state has a big role in the economy and cannot ignore its responsibility, said Maric, citing the pension, health and social systems as well as the wage system and subsidies as the areas where the state must act.

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