In an effort to ensure more equity in personal income taxation, the Croatian Government adopted a new, amended Personal Income Tax Act that entered into force on 1 March 2012. The new amendments should provide a basis for increasing the net income for lower income categories and reducing the net income for higher income groups. As a result of increasing the personal allowances and of changes in tax brackets, the general government budget revenues are expected to fall by about HRK 340 million annually, thus increasing the disposable income of households. Moreover, the Government has introduced a new taxable income category, i.e. dividends and profit sharing proceeds, as well as a tax on the pension supplement, which now becomes part of the pension. It has also introduced the taxation of foreign pensions in the same manner as domestic pensions.

Slavko Bezeredi in Newsletter entitled Impact of personal income tax changes on citizens’ tax burden will try to establish whether these changes will meet Government expectations and who the winners and losers are in the new tax scheme.

In the Press Release entitled Does the 2012 Budget Proposal Suggest a Fiscal Policy Turnaround in Croatia? Anto Bajo comments on the national budget proposal for 2012, discussed at the Government session on February 13, 2012.

In the new Press Release entitled The Challenge of Public Pension System Reforms, Marijana Bađun summarizes the main findings of an IMF paper on public pension reforms in advanced and emerging economies, published late last year.