RECORD COLLECTIONS Why don't citizens feel the increase in collected taxes?

(Patria) - In recent days, information has been released about record tax collections, not only compared to the pandemic year 2020, but also compared to 2019. 

It was stated - Revenues from indirect taxes (BiH level) in the first seven months of this year are higher by 475 million KM or 11.52 percent compared to the same period in 2020." 

„In the first seven months of this year, collections were 129 million KM higher than in the same period of 2019, according to the Tax Administration of Republika Srpska."

"The Tax Administration of the Federation of Bosnia and Herzegovina informs the public that taxpayers in the Federation of Bosnia and Herzegovina paid 2,735,996,349 KM in public revenues in the period January – June 2021, which is 289,594,718 KM, or 11.84% higher compared to the same period in 2020."

Faruk Hadžić, a macroeconomic analyst, commented on why citizens do not feel these increases in collected taxes every year.

„In order for the positive effects of these increases to be felt, the money needs to be directed towards a useful purpose. If I were someone with decision-making power, I would not hesitate for a second about where to direct all these increases in collected taxes, and that is to reduce contributions to the economy, where this reduction in contributions would be directed towards increasing workers' salaries, and thus consumption, and reducing/abolishing income tax on salaries up to 1,000 KM. 

In this way, there would be no negative effects on budgets, because contributions would be proportionally reduced by the amount of the increase in tax collection. And so every year until we reach a level of gross contribution rate of 25% and 0% income tax on salaries up to 1,000 KM. 

I fear that the opposite will happen, as in previous years - an increase in public spending, and that the economy and workers will not benefit from this at all,“ said Hadžić.