Čavalić analyzes 'measures' of the FBiH Government: We are far from fiscal reform, minimum income of 1,200 KM is a pipe dream

(Patria) - Party for Bosnia and Herzegovina MP Admir Čavalić analyzed the fiscal reforms of the FBiH Government, which he calls measures that are not reforms.

"Let us state from the start that these are not reforms, but technical/partial solutions, even time-limited (until December 31, 2025) - similar to what we proposed as a temporary solution at the beginning of 2023 (400 KM+ tax-free on net salary).

To better understand these announcements, it is necessary to separate the story into two parts:

(1) Draft Law on Fiscalization of Transactions in the Federation of Bosnia and Herzegovina

(2) Proposal for a Law Amending the Law on Income Tax

The Draft Law on Fiscalization of Transactions in FBiH relates to strengthening fiscal discipline. This draft implies alignment with new technologies, which enables more adequate supervision and greater transparency. It is a draft law, so one should be cautious about deadlines. It is likely that all this will be implemented by the end of 2025 or the beginning of 2026. We certainly expect full effects only in 2026. What should be paid attention to are the articles (31, 32, etc.) of this draft that relate to putting the fiscal system into operation, i.e., conditions for companies that will profit from this entire story about online fiscalization. We know that our laws are mostly driven by the particular interests of certain individuals, groups, and others close to political entities. We will discuss this most on the 27th when the session of the Federal Parliament is held. The law truly enables transaction transparency, increases their formalization, and aims to prevent money laundering. The draft deserves discussion," states Čavalić.

Regarding the Proposal for a Law Amending the Law on Income Tax, it is essentially about institutionalizing this year's tax-free one-time aid.

"That is why it is stated that this applies only for 2025. The procedure is shortened, so I expect implementation from January 1. The good thing is that this solution is more predictable than one-time aid and that differences are possible according to the worker's work performance (one-time aid had the logic of 'either all or none,' now it is not like that). Will workers receive this 200 KM? We do not know because, according to Article 75 of the Labor Law, work performance is there 'if it has been achieved.' So the 1,200 KM minimum income is somewhere in the clouds.

What is bad is the amount - only 200 KM (500 KM was expected, or at least 400 KM as we proposed last year) and the fact that these are not the fiscal reforms we expect - reducing the total contribution rate from 41.5% to 30, 28, 27, or 25%. Moreover, the excuse cannot be offered: 'We currently do not have enough time for detailed preparation of these reforms.' This sentence, which indeed appears in the explanation of these amendments, shows that the FBiH Government behaves nonchalantly towards fiscal reforms that everyone - workers, businessmen, politicians, society - has been waiting for more than 8 years (the RS entity reduced the total contribution rate and therefore has a minimum wage of 900 KM compared to 619 KM in FBiH).

Finally, let there be these 'steps.' As Chairman of the Committee for Economic and Financial Policy, I support the initiation of any activities towards fiscal reforms. But I note, these are still not the fiscal reforms needed to get FBiH moving," concludes Čavalić.