Domazet: By taxing allowances unilaterally, the FBiH Government is lying to citizens, workers, and employers

The President of the SDP BiH Council for Economic Development, Prof. Dr. Anto Domazet, believes that every citizen, worker, and entrepreneur today feels miserable and humiliated in the Federation of BiH with a Government that does not respect the signed obligation, lies and deceives its voters, and in the meantime has signed a capitulatory Letter of Intent for an extended arrangement of 550 million euros with the International Monetary Fund, it was announced from SDP BiH, writes the Patria News Agency.

“The FBiH Government claimed that it would ensure a reduction in social contribution rates, which would have a neutral effect on the deficit, so as not to jeopardize the sustainability of social funds, and that the reduction in rates would be accompanied by an expansion of the tax base for income tax through the taxation of all sources of income from work, especially allowances.

Translated, the FBiH Government committed to simultaneously introduce taxation of meal allowances and holiday bonuses and a reduction in social contributions (for health, pension system, and employment), so that the effect would be neutral for employers, workers, and the government.

Instead, the Government is first introducing taxation of allowances, while promising to reduce contributions at some point. A shameful move that introduces a gross violation of the distribution relationship between labor, capital, and government at the expense of labor and capital. After the adoption of the liberal Labor Law, workers are once again under a gross attack by the government – taxing meal allowances and holiday bonuses will reduce their income by at least 150 KM per month. And employers are once again under attack due to the gross deterioration of an already bad business environment, as the government is lowering their already low competitiveness by imposing new taxes.

And once again, everyone in this country is faced with untrustworthy governments – those that make unpredictable decisions and thus further endanger the lives and standards of citizens, reduce employment opportunities, although they are threatened by the merciless force of the market, which is shutting down businesses and jobs in the absence of meaningful government measures to do something in their favor through active development and employment measures.

This is not just a government implementing the darkest neoliberal policies at the expense of ordinary people; this is a government that is fleecing both workers and entrepreneurs to scrape together tribute to cover its own inefficiency.

Therefore, SDP BiH demands that the government immediately repeal the Rulebook on the taxation of employee allowances and prepare a package of legal regulations on the reduction of social contributions, and only after its adoption introduce the taxation of allowances.

Then, we ask the Government to prepare and publicly announce what reforms we can expect, and not to read them from the IMF's Letter of Intent. We ask them to ensure predictability, social justice (sharing the burden of reforms according to economic strength, and benefits according to the needs of specific social strata), transparency, and social dialogue in all reforms.

Finally, return the decision-making on reforms to the FBiH Parliament, and not for the Government or even, as in this case, the FBiH Ministry of Finance to make decisions on important issues,” states Professor Domazet.