Church tax stirs debate in Croatia

07/02/2014

Bloggers are divided over tax reform that requires all non-profit organisations, including religious institutions, with annual income of at least 30,000 euros to pay taxes.

By Drazen Remikovic for Southeast European Times in Zagreb -- 07/02/14

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New tax regulations will require Croatia's Catholic Church to pay taxes. [AFP]

The Accounting Act approved by Croatia's government will force non-profit organisations, such as the powerful Catholic Church, to submit regular income and expenditure and asset reports to the Finance Ministry. All non-profit organisations with revenues more than 1.2 million euros per year will have to face audit reports as well, Finance Minister Slavko Linic said.

"The aim is to introduce transparency in the operation of all civilian organisations, regardless of whether it is sports, church or some other companies," Linic told reporters on January 31st.

Church representatives criticised the government's decision.

"If they are planning to introduce a tax to the church, then they should abolish all NGOs such as, for example, LGBT associations or make them to pay taxes also," Damir Stojic, one of the chief priests in Zagreb, told reporters. "We will not collapse even if they make us pay tax because we survived even when we have been banned to act.''

The opposition condemned the announcement of church taxation, saying that the Catholic Church is a force for stability in Croatian society.

"The church gathers people and she is credited for Croatian history, and I think this is some kind of further ranting which is completely unnecessary," said HDZ's chief Tomislav Karamarko.

Most experts endorse the tax reform but warn that the government might lose some supporters.

''These organisations have a large amount of capital and are completely fine to be taxed," Davor Gjenero, a professor at the Faculty of Political Sciences in Zagreb, told SETimes. ''However, this decision will badly affect the rating of the government in the political sense, so the ruling SDP will lose the support."

Croatia is under pressure from the EU to bring its debt under control. The total deficit in the state budget at the end of August 2013 amounted to 1.8 billion euros, which is about 3.8 percent of GDP. The deficit for 2012 was 5 percent of GDP, while government debt was 55.5 percent of GDP.

The tax reform, in the country where a majority of citizens belong to the Roman Catholic Church, sparked debates and angered some bloggers.

"The government just bought a ticket to hell," Debilcheck wrote.

"They [the government] ran out of money and now they want to spend the church. Disgrace," 1st Guest wrote.

Others welcomed the government's decision.

"Everyone, without exception, must be taxed each cash flow and the end of the story ... in that way, the authorities will narrow the space for embezzlement," Starosjedilac wrote. "Currently, a large sum of money is pulling out with the help of various societies, associations, clubs and religious communities. And for the state? Not even a penny! When we, regular citizens can pay tax on wages, groceries, everything ... let them pay something.''

Others said that in a time of economic crisis and general unemployment every institution has to bear the burden of a difficult financial situation.

"In Croatia, it is not uncommon to see how some priests and monks are driving expensive cars. Therefore, I think it is a totally unnecessary luxury at a time when there are more than 350,000 unemployed people," Dario Zengic, 30, an unemployed professor of sociology from Zagreb told SETimes.

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Citizens also formed a group on Facebook called "Tax To Catholic Church in Croatia," which gathered nearly 8,000 members in a month.

On the other hand, Citizens' Association for the Protection of Human Rights "David" managed to collect thousands of signatures for the petition, calling for taxation of the church.

''The Catholic Church secured itself a special agreement about economic issues and therefore can work in all segments of financial and economic activity. Now, when it should pay tax as a legal subject, the church and its circles refer to historic and charitable credit,'' the association chief Boris Stanojevic wrote in his blog.

What kind of impact the tax reform will have on Croatia's economy? Join the discussion below.

This content was commissioned for SETimes.com.
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