Gov Accountability

Croatian property tax handily defeated, more citizens get to stay in homes

Artboard 3

Lipa Taxpayers Association has been named a finalist for Atlas Network’s 2018 Templeton Freedom Award.

With Croatia’s population declining for decades, its government ought to pursue policies that encourage growth. Instead, it pursued a policy that threatened to further push Croatians out with the 2017 passage of a tax on privately-owned property — and since nearly 90 percent of Croatians own their own homes, the new tax threatened to hurt the rich and poor alike.

Lipa Taxpayers Association refused to stand by and allow this property tax to hit an already troubled economy, so it enlisted one of the country’s most influential economists and launched an award-winning campaign against the tax, emphasizing Croatia’s already crippling tax burden. Its efforts turned public opinion sharply against the tax in a matter of months, resulting in over 146,000 petition signatures, media coverage in more than 100 news outlets, and a full repeal of the property tax.

Nearly 90 percent of Croatians own their own homes, so when the Croatian government passed a property tax for the first time in 2017, Lipa Taxpayers Association refused to stand by and allow this property tax to hit an already troubled economy. Its efforts led to the tax’s full repeal.

Following the repeal, public opposition to taxes has remained high, with the government unable to introduce any new taxes since. And while Croatians may still be overtaxed, they are grateful that Lipa’s success means they won’t be sending payments to the government just to live in their own homes.

"Stopping the real estate tax in Croatia was a huge success for civil society. It was the first time ever that citizens prevented the government from raising the overall tax burden in the country,” said Davor Huić, president of Lipa. “But perhaps even more importantly, we have created a popular climate in which it is politically very difficult, if not outright impossible, to increase the level of taxation in Croatia."

Majority of Croatians own their own homes

Due to their recent experience with communism and therefore the inability to save for the future, many Croatians choose to invest in property ownership as a means of saving. Because of this, more than 88 percent of Croatians reside in owned-homes (not rentals) regardless of demographic. Poor and wealthy alike own property in Croatia, and because of this, the introduction of the property tax would have harmed people across the economic spectrum.

A crowd holding signs at a Croatia demonstration.
Croatian citizens demonstrate against the introduction of the property tax.

Despite being in favor of a new tax reform package passed by the Croatian government in early 2017, Lipa took a strong stance against the last-minute introduction of a new property tax provision in the final bill. At the time, the provision was supported by all major political parties, most opinion elites, and 69 percent of the public, according to polls.

By March, Lipa launched a research and education effort designed to achieve two main goals: 1) Prevent the implementation of the property tax in January 2018 and 2) Increase citizens’ awareness of the high tax burden in Croatia.

Lipa commissioned Velimir Šonje, one of Croatia’s most influential economists to analyze the tax to demonstrate the tradeoffs it presented the Croatian people. With those findings in the context of the overall tax burden, Lipa launched a marketing and communications campaign to help all Croatians understand what was at stake. In addition, it launched a petition gathering component to demonstrate the unpopularity of the tax to the government, urging its repeal.

“Lipa has shown how a small civil society organization can have an outsized impact on a public debate and achieve an important tax repeal,” said Brad Lips, CEO of Atlas Network. “There's lasting impact here: Croatians who may not have felt that they had a voice in the past suddenly are empowered to stand up for their rights.”

Print it for Grandma!

The campaign and petition were launched on April 18, 2017 with a press release carried by all major media outlets in Croatia. In addition to online outreach, the effort included an offline campaign called “Print it for Grandma,” which leveraged Lipa’s volunteer network to collect signatures from people who were unlikely to use the online form.

The petition collected more than 20,000 signatures in the first 24 hours and reached 45,000 signatures in the first two weeks. When citizens started receiving forms from their local authorities asking them to give detailed account of their properties, signatures then surged to more than 146,000 people, roughly 3.5 percent of the population in Croatia.

Stacks of Lipa petitions piled up.
Lipa's petition campaign raised over 146,000 signatures.

The petition list was then used to further mobilize the citizens through newsletters and other forms of communication. Lipa’s strategic use of email marketing allowed for unusually high levels of engagement beyond just signing onto the petition.

At the peak of the campaign in early August it was difficult to find anyone defending the implementation of the property tax. On Aug. 8, 2017, Prime Minister Andrej Plenković pledged withdrawal of the tax. His pledge was fulfilled September 14.

About Lipa Taxpayers Association:
Zagreb, Croatia-based Lipa Taxpayers Association raises the standard of living for Croatian citizens by working to reduce the tax burden and public spending of Croatia.

About Atlas Network’s Templeton Freedom Award and the additional 2018 finalists:
Awarded since 2004, Atlas Network’s Templeton Freedom Award is named for the late investor and philanthropist Sir John Templeton. The award annually honors his legacy by identifying and recognizing the most exceptional and innovative contributions to the understanding of free enterprise, and the public policies that encourage prosperity, innovation, and human fulfillment via free competition. The award is generously supported by Templeton Religion Trust and will be presented during Atlas Network’s Freedom Dinner on Nov. 8 in New York City at the Intrepid Museum Manhattan. The winning organization will receive a $100,000 prize, and five additional finalists will receive $25,000 prizes. The finalists for Atlas Network’s 2018 Templeton Freedom Award are: