ZAGREB, October 8, 2020 — Hairdressers demonstrated on St. Mark’s Square in Zagreb to ask for a tax reduction on hairdressing services. They want a meeting with Finance Minister Zdravko Marić and Prime Minister Andrej Plenković. As a result, the introduction of a lower VAT rate should help the sustainability and development of the profession.
The Initiative for Lower VAT Rates on Hairdressing Services organized the protest on St. Mark’s Square in Zagreb. Hairdressers gathered there to demand a lower VAT of 13% on hairdressing services. Apart from a lot of banners, they also brought something unusual. They prepared a gift for Prime Minister Andrej Plenković and Minister of Finance Zdravko Marić.
“We’re going to give them scissors and a comb because they won’t have anyone to cut their hair in five to ten years,” said Ana Hart of the Initiative to Introduce a Lower VAT Rate on Hairdressing Services.
Lower VAT Would Increase Employment of Young Hairdressers
“Experiences in Slavonia are in such way that, young people are tending to leave. Although, there are a lot of hairdressers, there are very few children who want to do it. They are considering all options to move out of Slavonia. They have no desire to stay here,” they said.
“For us, a 13 percent VAT would allow us to educate and employ young people. We would improve our services,” they said. “Our prices would remain the same. We will not increase them. VAT will not affect any price change, but it may affect the salaries of our workers,” they added.
“We have contacted the Ministry of Finance and we are asking for a lower VAT. So, a reduction is necessary in these extremely difficult days. Minister Marić, if you hear our cry, it is time to react,” said Hrvoje Bujas from the Voice of Entrepreneurs.
Protesters Want an Answer and Admission to the Meeting
“For now, there is no reaction from the Minister of Finance and that is why we are gathering. We want to draw attention to the hairdressing profession. We’re looking for an answer and admission to the meeting in order to explain the problems of the hairdressing profession. Especially now, in times of the coronavirus. It would be a matter of filling the state budget much more. According to our analyzes, more than 70 million kuna would be added to the state budget”, Ivica Pavlačić told HRT Studio 4, from St. Mark’s square. Pavlačić owns a hair salon in Karlovac employing 15 workers.
One month ago, the Initiative sent a request for a meeting, as well as analyzes and projections that prove the justification for introducing the lower VAT rate. According to them, it would have positive effects on the state budget and professional development. However, to date, no meeting has been organized with the relevant ministry. The initiative for a lower VAT rate is supported by the Croatian Employers’ Association (HUP) and the Voice of Entrepreneurs Association (UGP).
Disapproval of the Tax Policy in Croatia
In a press release, they stated their demands. Apart from drawing attention to the challenges in their profession and a meeting with the two ministers, they criticize Croatia’s VAT system.
First of all, they state that Hairdressers are rightly mentioned in the EU Council Directive (2006/112/EC) for a lower VAT rate. The Directive describes the profession as a labor-intensive activity with a large share of personal work. They continue that “it is a devastating fact that less than 7% of hair salons are in the VAT system, while in 2013 there were 16%.” According to them, this shows the trend of fragmentation of the hairdressing business. They add that it says a lot about how unstimulating the tax policy is.
Subsequently, they set out the analyzes of the Initiative. They explain that it would be good for the state budget and employment. An additional 68 million kuna and a minimum of 700 new jobs would be created for young hairdressers, which would diminish the hairdressing exodus. Moreover, it would enable sustainability and development of the profession together with conditions for lifelong learning.
Croatia Among Highest VAT Rates in Europe
Finally, they compare the VAT rates of other EU countries. They exclaim that Croatia has one of the highest general tax rates in Europe with the current 25%. EU countries have a good experience and even after more than 10 years they have kept that lower VAT rate for hairdressing services. The latest example is the Czech Republic, which lowered the rate from 21 to 10%. Other countries with lower rates are Slovenia (9.5%), The Netherlands (9%), Ireland (13.5%), Cyprus (5%), Poland (8%) and Luxembourg (8%).
The hairdressing profession in Croatia has been struggling with this issue since before the epidemic. And especially now that their costs have risen significantly due to epidemiological measures, and the prices of services in salons have remained the same.
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