ZAGREB, March 10 (Reuters) - Croatia decided on Tuesday to end preferential treatment for the country's sole tobacco manufacturer, which has angered the European Union, and tax local and foreign cigarettes equally.
Failure to give equal footing to foreign tobacco
manufacturers and Tvornica Duhana Rovinj (TDR)
TDR's market share in Croatia is 85 percent, while it takes some 27 percent of the market in former Yugoslavia where smoking is very popular.
"The European Commission had found our proposal for three levels of cigarette taxes unacceptable, because it said this would discriminate against foreign cigarette makers," Finance Minister Ivan Suker told a cabinet session.
Croatia submitted the original proposal in April last year. It has since agreed to amend it, in consultation with Brussels.
"The Commission has welcomed our readiness to neutralise the tax differences for cigarettes and demanded equal tax treatment as soon as possible," Suker said while presenting amendments to the tobacco tax law.
Croatia started negotiating EU membership in 2005, hoping to conclude the talks this year and join the bloc in 2011. However, progress has been blocked since neighbour and EU member Slovenia imposed a veto because of an old border row. (Reporting by Zoran Radosavljevic, Editing by Peter Blackburn)