Prime Minister Jadranka Kosor announced at a government session on Thursday the introduction of three new income tax rates as of 1 July.

The first tax rate for salaries amounting to up to HRK 3,600 will amount to 12 percent, the rate for salaries ranging between HRK 3,601 and HRK 10,800 will amount to 25 percent, and the highest rate of 40 percent will apply to incomes exceeding HRK 10,800.

Kosor said the new tax rates meant higher incomes for 1,480,179 people.

The PM said that introducing the new income tax rates and abolishing the so-called crisis tax rates would bring citizens an additional HRK 1.5 billion annually, while the reduction or cancellation of tax reliefs would bring them HRK 500 million less annually, so eventually citizens would get HRK 1 billion more a year.

The cancellation of the first rate of the so-called crisis tax, scheduled for 1 July, will increase the income for 967,000 people, while 352,000 citizens will start receiving higher incomes with the abolishment of the second rate, scheduled for 1 November, the PM said.

The three new rates will replace the current four income tax rates.

"I believe that life will be easier for Croatian citizens as of 1 July," Kosor said.

Finance Minister Ivan Suker also stressed that incomes of Croatian citizens would increase.

Commenting on the government's having been criticised for introducing the crisis tax, Suker said he now expected a change in the rhetoric.

The existing income tax rates in Croatia are 15, 25, 35 and 45 percent.