Croatia prepares $725 mln package to counter rising energy prices

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SARAJEVO, Feb 16 (Reuters) - The Croatian government has prepared a 4.8 billion kuna ($725 million) package designed to offset the impact of rising energy prices on households, businesses and socially vulnerable groups, Prime Minister Andrej Plenkovic said on Wednesday.

"This package has been designed in a systematic way, it's timely, well prepared and comprehensive," Hina news agency quoted Plenkovic as saying. "The package is aimed at households, companies and farmers."

He said that while electricity prices had risen more than 30% and gas prices more than 70% in the European Union by the end of 2021, Croatia had not yet increased prices for households.

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Plenkovic said the government measures will limit the rise in electricity prices to 9.6% and gas prices to a maximum of 20%, which would otherwise rise 23% and 79% respectively.

The government will also permanently cut value added tax (VAT) on gas and heating energy from 25% to 13%, and temporarily cut VAT on gas to 5% from April 1, when the measures will become effective, to end-March 2023.

VAT on basic food staples, such as fresh meat, fish, eggs, fruits and vegetables will be reduced from 13% to 5%, and fees on some hygienic items will go down to 13% from 25%.

The total value of VAT cuts will amount to around 2.1 billion kuna, the government said.

The association of entrepreneurs Glas Poduzetnika welcomed the government measures but said in a statement that they should come into force immediately, and not on April 1.

($1 = 6.6166 kuna)

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Reporting by Daria Sito-Sucic; Editing by Kirsten Donovan

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