The Croatian government decided on Thursday to
raise the excise duties on cigarettes and tobacco and on motor fuel to help
deliver budget savings requested by the EU.
On Wednesday, Croatian deputy
prime minister Branko Grcic said that the government in Zagreb may look into
raising excise duties while cutting subsidies and public investments as possible
measures in line with a request from the European Commission for further budget
savings in order to keep the deficit and public spending under
control.
State-run news broadcaster HRT has reported that the Commission
has requested further spending cuts of 1.3 billion kuna ($182.6 million/171.6
million euro), equal to 0.4% of gross domestic product, on top of those already
presented to it by the Croatian authorities. The plans for the additional
savings measures should be ready by April 21.
The specific excise duty on
cigarettes is now set at 230 kuna per 1,000 pieces, up from 210 kuna, documents
posted on the government's website showed. The ad valorem excise duty as a
percentage of the tax inclusive retail sales price has been raised to 38% from
37%.
The minimum specific excise duty was raised to 648 kuna per 1,000
cigarettes from 598.5 kuna previously while the excise on finely cut tobacco is
now set to 550 kuna per kg, up from 520 kuna.
The increase in the
cigarette and tobacco excise duties is expected to raise budget revenues by
around 150 million kuna on an annual basis.
Theexcise duty on petrol for
commercial use was hiked by 200 kuna to 4,500 kuna per 1,000 l for leaded
products and to 3,860 kuna from 3,660 kuna per 1,000 l for unleaded
products.
The excise duty on gas oil for industrial use will go up by 200
kuna to 3,060 kuna per 1,000 l.
The increase in the petrol excise duties
is expected to raise budget revenues by around 450 million kuna on an annual
basis.
In January, finance minister Boris Lalovac said that preliminary
data on a cash basis shows the country's 2014 budget gap coming in at around
12.8 billion kuna.
In January last year, the EU initiated an excessive
deficit procedure against Croatia, the bloc's newest member state, in a push to
ensure that the country's deficit and debt are brought back into line with the
relevant requirements.
In its recommendation issued at the time, the EU
set deficit targets for Croatia of 4.6% of GDP for 2014, 3.5% of GDP for 2015
and 2.7% of GDP for 2016, consistent with an annual improvement in the
structural balance of 0.5% of GDP in 2014, 0.9% of GDP in 2015 and 0.7% of GDP
in 2016.