RITAM POSLA Marijana Ivanov

Guest Marijana IvanovHosted by Lidija KiseljakMay 3, 2026

Marijana Ivanov

About this episode

What you'll hear in this conversation

Croatia's new tax reform package, set to take effect in 2024, has been presented as a step forward for the economy and its citizens. But Marijana Ivanov, a professor at the Faculty of Economics in Zagreb, sees it differently. She argues that the reform is largely an illusion, what she calls "much ado about nothing," offering negligible real benefit to low-wage earners while potentially fostering the gray economy. Ivanov's perspective cuts through the policy rhetoric, revealing a deeper critique of Croatia's economic trajectory. She questions the wisdom of decentralizing tax decisions, the sustainability of pension adjustments, and the fundamental structure of an economy increasingly reliant on EU funds and low value-added sectors. This conversation challenges the surface-level optimism, inviting listeners to consider the long-term implications of current economic policies. You will walk away with a sharper understanding of how seemingly minor policy changes can reflect and reinforce significant structural challenges, and where the real opportunities for progress lie.

Insights from the conversation

What to take from this episode

Marijana Ivanov dismisses the 2024 tax reform as "much ado about nothing," noting that a person earning 1290 euros gross will see their net pay increase by a mere 0.75 euros. When the touted benefit of a major policy change is less than a euro, it risks insulting intelligence and signals that the policy's true impact is negligible.

Ivanov expresses strong reservations about giving local governments the power to set income tax rates annually, stating, "I personally would not leave such questions to local government units." Decentralizing a core tax like income tax to local units, especially on an annual basis, can create significant uncertainty for taxpayers and a fragmented system, particularly when local officials may prioritize immediate revenue over broader economic strategy.

A decade ago, Croatia struggled to fund pensions, but now the state is relinquishing part of the pension contributions, effectively taking on the financial burden itself. Shifting pension contribution costs to the state without addressing the underlying financial health of the pension system creates an illusion of stability, but offers no long-term benefit to retirees and risks being reversed by future administrations.

Despite rising GDP and employment, Marijana Ivanov states that "nothing has changed with the quality structure of the Croatian economy," which still relies heavily on tourism, trade, and construction, while manufacturing and agriculture decline. Economic growth fueled by EU funds and service sectors is unsustainable if it doesn't improve the fundamental structure of the economy; true long-term prosperity requires a shift towards higher value-added industries.

Ivanov identifies Croatia's core economic challenge as its dominance in "production with relatively low added value," both for domestic markets and exports. An economy stuck in low value-added production perpetuates a cycle of low wages and consumption, making it difficult to achieve higher living standards or break into more competitive global markets.

While lamenting the decline of traditional industry and and agriculture, Ivanov points to the green transition and digitalization as "new moments that allow for progress, increased productivity." Even when traditional economic sectors have declined significantly, embracing global trends like green transition and digitalization offers a critical opportunity for a country to reorient its economy and foster productivity gains.

Croatia faces a demographic crisis, with a shrinking population and foreign workers who, as Ivanov notes, "have not come here to stay" or start families. Relying on a transient foreign workforce without long-term integration strategies fails to address fundamental demographic decline and prevents the growth of a stable domestic market essential for sustained economic improvement.

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