Trade union leaders differed in their comments on the government's budget projections on Thursday, with some saying that the planned budget savings would eventually be paid for by citizens, while the others were pleased with the government's plan.
The head of the Croatian Independent Trade Unions (NHS), Kresimir Sever, said that initial estimates by the NHS showed that the increase of the non-taxable income and the change of the tax brackets would not significantly affect the wages, adding that lower wages would go up by several dozen kuna while higher wages would fall.
Sever said that the raising of the general VAT rate from 23% to 25% would lead to price increases and that its effect would prevail over the effect of some of the VAT rates being lowered.
Boris Feis of the Federation of Independent Trade Unions of Croatia (SSSH) said that the VAT rate increase would bring 2.5 billion kuna of fresh revenue into the budget, but that it would also increase the inflation rate by about 1.5%.
The SSSH said it supported the increasing of the non-taxable income from 1,800 to 2,200 kuna. It described the government's growth projection of 0.8% as unambitious and said it was not clear who would finance the projected gross investment increase of 7.4% and how.
Since the government forecasts a decline in personal spending of 0.3%, it obviously expects a fall in wages of at least 1% in real terms, which is unacceptable because it puts workers' living standards at risk, the SSSH said.
The leader of the Croatian Association of Trade Unions (HUS), Ozren Matijasevic, said that the HUS, as the government's social partner, had not been informed about its budget projections, but said that it found the government's plan acceptable because the budget expenses were cut and the increased general VAT rate was accompanied by lower rates for food and clothing.
Matijasevic welcomed the introduction of exemptions for employers taking on new workers and the proposed income tax measures, saying that people with lower wages would profit from such measures. He recalled that 60 per cent of wages were below the national average.
Vilim Ribic of the MHS trade union federation said that there was no other way for the government to patch up the budget hole than to increase the VAT rate. "I don't believe the government had an alternative. Making savings through reform takes longer," he said.
