The two per cent crisis tax on incomes between 3000-6000 Kuna (410-821 Euro) will be abolished from July 1st 2010, Croatia’s Prime Minister Jadranka Kosor has announced at a government session on Friday (March 12).

Brought in last August in order to keep the country's budget "above water", the crisis tax has two bands: 2% for incomes between 410 - 821 Euro and one of 4% for those earning over 821 Euro. Those liable for the second band will continue to pay after July.

Kosor said she believed the decision to abolish the two per cent tax would be well received by business community and the Croatian Employers' Association.

Until now, the tax has not been applied to incomes under 410 Euros (870 thousand pensioners and 590 thousand employees). More than one million employees and 300 thousand pensioners currently pay the tax. From July 1st, 720 thousand employees and 247 thousand pensioners will be exempt.