The loss of public revenues in BH could be offset by an increase in indirect taxes, as a result in Republika Srpska a non-taxable income of 300 KM per month could be introduced, considers the Center for Research and Studies GEA Banja Luka.
According to their calculations based on data from the previous year, the increase of taxes in the value of one percentage would, on the state level, create up to 186 million in additional revenue.
If this were to happen, Republika Srpska will have a tax free income of 300 KM per month and additional tax breaks.
The GEA Center states that if this reform focuses only on the relief of one third of employees, with the lowest salaries, a reduction of the burden of tax on their labor will be possible, in the amount of nine percent.
This will increase their net pay by about 16 %, whilst the labor costs for employers will remain the same.
The GEA Center suggests serious consideration for reducing taxes and contributions on income above the level of revenue-neutral, which would be possible if one part of the funding is provided through fiscal savings.
This Center welcomes the announcement made by the Srpska Government on the introduction of the tax free income of 200 KM, but believes that this measure is not sufficient with respect to macroeconomic developments, the situation on the labor market and the measures taken by the countries of the EU and the region.
With this measure the average “tax wedge” is reduced by 1.5 percent to 38.2%, which is not an overly big shift.
The Western Balkan countries, as well as all over Europe, have traditionally high taxes, which proved to be particularly negative in the last crisis period, when the problem of employment was flared up.