The history of taxation of citizens' income for the purpose of financing public expenditures goes back to the distant past. Considering the long-term application and survival of this approach of citizen participation in the financing of public goods, it can be concluded that it is effective and that no better way has been found to achieve the same effect. Throughout its history and development, taxes have branched out into several types. Each country must be careful how it charges its citizens to ensure that the system is fair and socially sensitive, while at the same time contributing to economic growth and development. Although a tax is a benefit that has an element of coercion in its definition and method of collection, there are principles of taxation that ensure that this coercion does not go too far. The tax system of the Republic of Croatia is primarily classified according to the level of government and the budget to which the tax revenues belong. The tax system of the Republic of Croatia has so far proven to be effective and, as has been proven in the past, it does not hesitate to make changes and adjustments in case of citizen dissatisfaction, injustice or economic events that require it. The most prominent tax in the tax system of the Republic of Croatia is value added tax or VAT.