Government announces tax cuts and subsidies to tackle rising energy prices

NEWS 16.02.2022 12:29
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Source: Goran Stanzl/PIXSELL

The Croatian government on Wednesday finally unveiled a 4.8 billion kuna (€640 million) package of measures designed to help Croatians cope with surging energy prices.

The package includes the “capping of the growth of electricity prices to 9.6 percent and the growth in prices of gas to 20 percent,” state agency Hina said.

The package contains “measures targeting households, businesses, and farmers,” PM Andrej Plenkovic said on Wednesday, adding that the state-run power board HEP would also bear “part of the burden” to address the rising electricity prices.

The set of measures includes cutting tax rates, subsidies for people at risk of energy poverty, and one-off discounts for energy bills for pensioners, while businesses, farms and fisheries will be entitled to subsidies to cope with the rising energy costs.

Cap for electricity paid to make 460 million kuna disposable to households

The caps on the rise in prices of electricity will make 460 million kuna disposable to households. The subsidies for households using gas will include 0.10 kuna per kilowatt-hour. The support will be provided to micro businesses and SMEs with the average annual consumption of gas up to 10 gigawatt-hour, and the discount will be 0.15 kuna per kWh.

The VAT rate on gas and heating energy will be lowered from 25 percent to 13 percent, the same VAT already applied on power. The lower VAT is a permanent measure. Furthermore, the VAT will be additionally cut to 5 percent on gas as a temporary measure in place from 1 April 2022 to 31 March 2023.

VAT to be reduced on some food in bid to tackle rising cost of living for households

The VAT rate of 13 percent will be reduced to 5 percent for fresh meat, fish, eggs, fruits, vegetables, cooking oils, and baby food and the the standard 25 percent VAT rate will be slashed to 5 percent on some items needed for farming, such as fertilizers.

The package aimed at tackling rising costs of living includes the reduction of the 25 percent VAT to 13 percent on feminine hygiene products such as tampons and sanitary towels. The coupons for electricity bills for senior citizens at risk of poverty increases from 200 to 400 kuna a month and will now refer also to gas bills.

Pensioners whose monthly income is up to 4,000 kuna will be also entitled to the payment in the between 400 and 1,200 kuna under the the energy support scheme.

(€1 = 7.52 kuna)

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