Objection to reduction of VAT on newspapers

11. June 2013.

Some external members of the parliamentary Finance Committee on Monday objected to a proposal to reduce Value Added Tax (VAT) on some daily newspapers, stating that the reduction of VAT from 10 percent to five ppercent should be applied to all newspapers and not just some, while some members said VAT should remain as it was.

One member said that the proposal was too complicated and that such differences between newspapers were not made in the European Union.

It is not clear why the proposal consists of a reduction of VAT for scientific journals, yet it does not recommend a reduction of VAT on cultural magazines, he said.

Tax Administration Director Nada Cavlovic Smiljanec said that the Finance Ministry had been in consultation with the Ministry of Culture and that it was decided that the reduction of VAT could not be applied so broadly.

"Today in Croatia there are daily newspapers that are just 'copy/paste' versions of the Jutarnji and Vecernji dailies and they have more pictures and adds than text and the question is should the state stimulate such dailies", she said.

Another committee member said that citizens were only concerned with the question of whether a reduced VAT would mean cheaper newspapers, otherwise the only benefit of the reduction would be to subsidise their publishers.

The committee adopted a report on the execution of the 2012 State Budget.

Deputy Finance Minister Boris Lalovac pointed out that the government had managed to reduce the deficit from HRK 15 billion to HRK 10 billion, which is around three percent of the budget. He rejected interpretations that the deficit was reduced by tax pressure but stressed that it was the result primarily of tax discipline and the efficiency of the Tax Administration.

The committee adopted a report on the state audit and audit of the execution of the state budget in which a comment was made that irregularities identified in previous years had not been rectified.