Document proposing a comprehensive tax reform in Bosnia and Herzegovina with the aim to reduce direct labor taxation, increase taxation of consumption and other forms of tax that do not burden the economy.
In late February and early March 2012, the Federal Institute for Development Programming, in cooperation with Cantonal Chambers of Commerce in the Federation of Bosnia and Herzegovina, organized presentations of the document "Tax Reform to Support the Investment and Employment". Presentations were held in cantonal chambers of commerce in Sarajevo, Zenica, Tuzla and Bihać, and are planned to be organized in further Cantonal Chambers of Commerce. Number of businessmen, public and scientific workers participated the discussions on the document. Large number of them gave full support to the tax reform we advocate.
The sense of the reforms is clearly illustrated by the fact that it would introduce significant economy relief, from the current 74% net income tax rate to the level of 36%. In the long run, the economy reduces the cost of payroll, the business increases the accumulation, this creates the prerequisites for new investment and employment, creating conditions for growth of enterprises, resulting in total growth of economy and gross domestic product (GDP). According to our estimations, with the extremely stimulating tax rates we propose (44% and 36%) there would be a significant increase in employment. We believe that, by implementing a tax reform document, the number of FBiH employed persons will double in the next ten years, bringing solution of the political crisis in Bosnia and Herzegovina and more stable political situation in the region, furthermore contributing solution of effects of the debt crisis in the eurozone along with the global financial crisis.
The paper deals with the issue of mitigating the tax reform consequences for the poorest category of population. Social programs and the Fund for the poors are foreseen, while it would not be a problem to finance the funds through the tax reform.
The document "Tax Reform to Support the Investment and Employment" is the first and only document of this kind in Bosnia and Herzegovina since the Second World War to date, which deals seriously and comprehensively with need for economy relief.
Here are some of discussion point outs:
- The sooner the application of this document, the better for the overall social development;
- Proposed solutions should be implemented as soon as possible;
- This document opens new, more efficient paths for BiH development;
- The good side of the document is to stimulate exports and establish a balance of foreign operations;
- The political structure that accepts and implements this document ensures own stability;
- A good idea, such as this one, should also provide a favorable political ground;
- If this document is accepted and timely implemented, then this country has a chance.