TAXES TO BE RAISED IN BOSNIA AFTER LOCAL ELECTIONS IN OCTOBER

SARAJEVO, Bosnia (September 2,2008) - The Bosnian Deputy Finance Minister Fuad Kasumovic has announced yesterday that direct taxes and excise taxes would be raised right after the October elections, which means higher prices of cigarettes, coffee, alcohol and oil.He said that the Value Added Tax (VAT) rate would be raised to 21 per cent next year.

However, his estimate is that even this measure will not be enough to offset the losses that the Bosnian economy has seen in tax revenue as a result of the implementation of the interim agreement on trade and trade-related matters.

Tax revenues in July were down by 7 million Bosnian Marks, compared to July 2007, after tariffs were cancelled for about ten per cent of items imported from the EU.

Kasumovic says that this increase in VAT rate is not only due to lower tax revenue, but largely to excessive public spending. As of January 1, 2009, tariffs will be cancelled for more than 95 per cent of items imported from the EU.

Strong reactions have followed from members of the Bosnian business community, after yesterday’s announcement by the Bosnian Deputy Finance Minister Kasumovic.

In their opinion, impositions on the business sector are already high as it is, from VAT and excise tax to all kind of fees and taxes. A higher VAT rate could even be tolerable if the Bosnian government had quality programs for the socially vulnerable, but since such programs currently do not exist, the entire burden of increased spending would fall on consumers, they argue.
.