”There are only a few months left until the end of the year and the Indirect Taxation Authority of Bosnia and Herzegovina (ITA BiH) has already announced that they will need much more time to prepare for the implementation of the law, which will expire at the end of the year,” macroeconomic analyst Faruk Hadzic pointed out in an interview.
”Now we are talking about some moves, some measures that the decision-makers in BiH have now prepared, but those measures should have come into force much earlier. I’m talking about the beginning of the year, when the profession appealed, offered more specific proposals, and then such measures would now have certain effects. However, sometimes you pass a measure just for the sake of it, to say that you have done something if you have not guessed the timing, then it is sometimes even counterproductive.”
Hadzic explains that the VAT system has two main functions – on the one hand, it collects the tax, and on the other hand, that money should then be returned to certain categories of the population.
”We do not have a problem with collecting taxes in BiH, and it is often considered that this is the problem. However, the problem is in the distribution. Why does this money not go to a greater extent to, say, pensioners, but it goes to certain decision makers? So it’s a matter of priorities and ways of collecting and distributing these funds. On the other hand, this year will be a record year in terms of collected taxes. This is due to the negative effects of inflation, but the question always arises as to why this money did not reach the citizens.”
Hadzic states that VAT is a specific tax that is paid on every product and service.
”So a very good way of collecting a lot of money, a lot of tax revenue in BiH, but that money should then be used in the right way. If you don’t know what to do with that money, then it is usually subject to some perhaps populist measures by increasing wages in the public sector before the elections itself, and we do not think about whether the same amount of money will be collected next year, for example, because we have other more serious problems that are being pushed aside, such as the emigration of the population.”
Regarding the differentiated VAT rate for basic foodstuffs and luxuries, he says that one should be very careful.
Also, he emphasizes that it is an illusion that the prices of all products and services will return to the previous level.
”That is not true. Stopping inflation will be done in a slightly different way. The goal is to prevent a new rise in prices, and then over time to try to increase wages in order to reach that certain standard.”
To the question of whether the price of basic, as well as all food items, has justifiably risen in our country, Hadzic answers: “This is one segment that unfortunately, we cannot control. We are not the primary food producer so we can in some way influence the price of such a resource that is also important for our country. If, on the other hand, you take the electricity that we produce and export and whose price we can influence, then you see that there has not been such a drastic price increase as was predicted at one point. In this case, we are an importer of food, we do not produce enough in our country, so we can only accept the prices that come to us from abroad. That is why we have such a significant inflationary blow.”
He explains that with measures such as the abolition of excise duties on fuel, a time limit of 30 days cannot lead to any significant effects.
”It is necessary to have such a suspension in the collection of excise duties for a minimum of six months in order for the price of fuel to stabilize in some way and for a general decrease in the share of energy costs in the production process of many companies and thus to curb the inflationary impact that we are witnessing. But regardless of this measure of 30 days, entity governments can, of course, if they want, not to keep the money they receive every month from the excise tax on fuel, but to subsidize the price of fuel.”
He emphasizes that there will still be fluctuations in the price of fuel.
”The profession is worried that they could enter a new recession as early as next year, because this high level of inflation, as things stand now, can only be contained by increasing interest rates.”
He points out that this is the highest inflation in BiH in the post-war period, Federalna writes.
E.Dz.
