Delegates: Government's Draft Law on Income Tax Would Reduce Revenues in Six Cantons

The House of Peoples of the FBiH Parliament is unlikely to support the Government's Draft Law on Income Tax today, after most delegates criticized that the adoption of this law would lead to a reduction in revenues in municipalities and cantons where the real sector dominates.

Minister of Finance Jelka Milićević said that the Government's goal is to tax high salaries in the Federation, while low salaries would remain untaxed. Salaries up to 700 KM would be outside the taxation system. Salaries up to 1,500 KM would be taxed at 10 percent, and those above 1,500 KM at 20 percent.

- Our main goal is to tax high salaries, while lower salaries would be outside of that - Milićević said.

Head of the Croat Caucus Tomislav Martinović said that he supports reform laws, but that the Government must consider that some municipalities and cantons could lose part of their revenue after this law comes into force, and that a way to compensate for this should be sought.

- Cantons where most workers are employed in the public sector, where salaries are higher, would have increased revenues after the law comes into force, while municipalities and cantons where most people work in the real sector and where salaries are low would experience a drop in revenue - Martinović said.

From the simulation of the new law presented by the Government to the delegates, it is seen that there would be a drop in revenues in six cantons, while in four cantons (KS, HNK, ZHK, and Canton 10), where the public administration of the Federation is concentrated, revenues would increase. Minister Milićević believes that there would be no drop in any canton, because not all parameters were taken into account during the simulation, such as dividends and other types of income.

Delegate Aner Žuljević said that the Government's Draft Law is discouraging for married couples because it abolishes personal deductions for family members. Although European countries, as well as neighboring ones, are introducing incentive measures for married couples with more children, the Government's Income Tax Law abolishes such incentive measures.

- We don't even need to talk about the fact that the law discourages people from keeping money in banks anymore because dividends will also be taxed, or that young people are leaving the country because the jobs of so-called 'freelancers', who are now 'selling their brains to foreigners and bringing fresh money into BiH', will also be taxed - Žuljević said.