Zagreb  - In an effort to fight the growing financial crisis, Croatia's government on Thursday introduced a new 3-per-cent "solidarity" tax on incomes.

The new tax will take effect on August 1 and will be applied until the end of next year. The tax will be paid on all after-tax incomes higher than 570 dollars, including part time jobs and pensions. Additionally, value-added tax will rise from 22 to 23 per cent.

After meeting with labour unions on Wednesday evening, Croatian Prime Minister Jadranka Kosor said Croatia is "keeping its head out of the water" but economists believe that the measures will only provide short-term solutions.

Croatia has been hard-hit by the global financial crisis. The country's gross domestic product fell 6.7 per cent in the first quarter of 2009 its biggest drop in years.(dpa)