Political parties from the Federation of BiH (FBiH) required that the IMF conducts analysis of complete system for the collection and distribution of revenues from indirect taxes. Although there is no indication of who is guilty for this situation, and there is also possibility of system error, the final explanation of this problem is yet to be found.
The often repeated statement that “Republika Srpska (RS) funds the whole BiH”, although contrary to official data, is widely accepted as the truth among the political leadership of the smaller BiH entity.
President of RS, Milorad Dodik, said at the recent Economic Forum Jahorina 2016 that the smaller BiH entity allocated 5.6 billion BAM for funding of the state institutions since the war until 2016.
According to data from 2015, a total of 4, 4 billion BAM were paid for indirect taxes on account of the ITA by companies and institutions from FBiH, 1, 7 billion BAM were paid from RS and 126 million BAM from Brcko District.
At the same time, 2, 8 billion BAM were returned through distribution of revenues from indirect taxes in FBiH, 1, 4 billion BAM in RS, and 155 million BAM in Brcko District. Tax return of 650 milion BAM was given to companies and municipalities in FBiH, 299 milion BAM in RS and 30 milion BAM in Brcko.
It is evident that the amount of returned is almost identical to amount of paid money to RS, through distribution of tax incomes and tax returns. In case of FBiH, there is shortage of around billion BAM which is equal to amount of the budget of state institutions, because this entity paid 4, 4 billion BAM and got 3,4 billion BAM from the ITA in return.
Having in mind that the disproportion between the amount of indirect taxes paid and the money that FBiH gain in distribution from the account of the ITA is present in the last 10 years, it can be concluded that FBiH financed state from 2006 to now with about 10 billion BAM.
This disproved the argument of Dodik that “RS funds the whole state”. On the contrary, the smaller BiH entity is profiting from the distribution of the money from the indirect taxes despite stagnating economy. It would be politically and economically wiser for Dodik to support the efforts of entrepreneurs on reforms of the system of collection of indirect taxes, and particularly VAT, in a way that taxes are paid on a cash basis and not by issuing invoices.
(Source: A. Perco/ Fakor.ba/Photo: I. Sebalj)
