Economist Ivan Lovrinovic.JPG
Economist Ivan Lovrinovic
Photograph: HINA /Zvonimir KUHTIĆ/ zk

Economist Ivan Lovrinovic of the 'Only Option' coalition on Thursday presented the coalition's platform of monetary and tax policies and said that Croatia needs a strong turnabout in its economic policy based on new foundations because the Croatian Democratic Union (HDZ) and the Social Democratic Party (SDP) had implemented the same model since 1993 which is not giving any results.

The Only Option will differ from its contenders because it will combine fiscal and monetary policies with active employment measures, subsidies and restructuring of the real economy.

Lovrinovic said that enterprises and employees would be unburdened and that interest rates that are several times higher than in competitive countries would be decreased significantly.

The non-taxable level of income will be raised to HRK 5,000, while entrepreneurs will be guaranteed that reinvested money will not be taxed. At the end of the term, the coalition plans to increase the minimum wage which is lower only in Romania.

The Only Option also intends to charge Value Added Tax upon payment as well as introducing a 5% VAT rate for agriculture.

The budget deficit due to the lower VAT rate would be covered by re-scheduling the public debt which would also then finance subsidised employment programmes, development of science and the economy, and debt reduction.

Lovrinovic said that by re-scheduling public debt through interest rates, the country could save HRK 5.1 billion annually.

Apart from that, Lovrinovic said, there is currently HRK 17 billion in the Croatian National Bank's capital account, HRK 7 billion of which should be transferred to the Ministry of Finance.

Ivan Vilibor Sincic, the leader of the Human Shield, a partner in the Only Option coalition, said that political stability is the main precondition to realise the coalition's platform and that is something that Croatia has not had over the past few years.

The Only Option coalition consists of the Human Shield, the Franak association of debtors with mortgages pegged to the Swiss franc, the Let's Change Croatia party and the Youth Action group.

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