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ATAHK reads from Xinhua News that Croatia will raise the taxfree part of salary aimed at stimulating consumption, Croatian Television reported on Wednesday. For details, please refer to the following news from Xinhua News on August 21st:
The plan is to raise the taxfree part of the monthly salary from 2,200 kunas (about 400 U.S. dollars) to 2,600 kunas, meanwhile the government is to apply for the highest tax rate of 40 percent to those with salary above 13,200 kunas in the future and not as far to those with the salary above 8,800 kunas, it said.
It was estimated that the measures would reduce revenues by about 2 billion kunas but it could be compensated by potential higher consumption.
For those with the minimal salary of 2,410 kunas would not profit much from the reform as they would have only about 30 kunas more to spend.
But for those with salary above 10,000 kunas the reform would make significant impact that means new tax rates would let them put around 1,000 kunas more in the pocket a month.
The Croatian Employers Association supported the changes and believed that the measure would increase the optimism of citizens and stimulate spending, according to Croatian news agency Hina.
"The announced changes in tax brackets and reducing of income tax is certainly a good measure," Davor Majetic, CEO of Croatian Employers Association, said. "With higher incomes workers will have more money available to spend and this will increase the optimism of our citizens and consumption. This means a new dynamics in the market and we hope that it will have the impact on the Croatian economy."
However, some trade unions opposed the new tax reform, saying it was a symbolic shifts and would not improve the standard of living for the majority of Croatian citizens who are struggling to cover monthly expenses. (1 U.S. dollar = 5.73 Croatian kunas)
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