The crisis, that has hit all the countries, put to the tempted of their economic policies and uncovered their weaknesses. As the biggest mistake in the economic development of the Republic of Croatia was shown that it was based on excessive borrowing of citizens and the state. On this way, in the time of crisis, the instruments of monetary and fiscal policy were significantly limited. After going out from the crisis, it became quite clear how certain changes had to come in the structure of budget revenues and expenditures. The result of that is the tax reform by which strived to reduce the tax burden on income tax, which more burdened workers. This has enabled the workers that with additional disposable income they can better meet the needs and thus positively affect on economic growth. In the paper an analysis was conducted which variables have had the most significant impact on economic growth in the past ten years, and the result indicated that, among the selected variables, government spending was still the most significant. In order to confirm the impact of the reduction of income tax in the function of GDP growth, an analysis has been conducted whose results confirm that a reduction in personal income tax should result in an increase in GDP.