Kovacevic: The tax system in Serbia is bad and bad, reform is needed

The tax system in Serbia is bad and poorly functioning, and it should be changed to be progressive, and for those who earn more to pay more, and for those who earn less to be exempted, economist Milan Kovacevic said today.

Regarding the increasingly frequent requests of employers and the professional public to change the Law on Personal Income Tax and to reform the tax system, he told the Beta agency that the law has been changed several times, but that it is about 30 years old.

“The law on personal income tax is bad and works poorly, and it should be changed, as well as the tax system, which envisages numerous taxes that should be radically reduced for both natural and legal persons,” said Kovacevic.

He added that parliament often adopts imprecise laws so that the government can pass a number of bylaws and interpret how it responds.

According to him, in addition to the progressive tax rate, tax exemptions should be introduced for families with more members, which is also important from the point of view of demography.

He said that it would be good to predict some kind of balance at the end of the year to see what was paid, and if the overall tax burden is too high, part could be returned if it turns out to be prepaid, which would contribute to trust between citizens. and tax officials.

In Serbia, tax officials, as he said, try to collect as much tax as possible, even when they have no basis, they find some interpretation of the regulations, while in some western countries, the paid tax is returned if it is overpaid.

“A simple system should be created, computers are a boon, and when the rules are established, citizens can easily pay tax duties,” Kovacevic said.

He pointed out that in Croatia, citizens pay all tax duties on one call to the number, and in Serbia, everyone has a special one, so it still changes from year to year.

The Union of Employers of Serbia demands a reduction in taxes and contributions on all salaries and an increase in the non-taxable base, and the Fiscal Council proposed a change to two models on the occasion of the 20th anniversary of the adoption of the Law on Personal Income Taxation because it “deviates from European standards”.

The existing law, the Council said in an analysis entitled “Opportunities and Needs for Reform”, unequally taxes related income categories, prescribes modest benefits for low- or irregular-income workers and completely omits tax credits for dependent family members.

The Council proposes that Serbia, in accordance with the prevailing European practice, instead of the existing system, introduce a modern dual system of income tax that would jointly treat and progressively tax all income from individual income, with a significant increase in the existing non-taxable threshold and introduction of tax credits for dependents. households.

The Council pointed out that during the previous years, technical preconditions were created for the modernization and implementation of tax reform which would treat all forms of income from work (salaries, temporary and occasional contracts, author’s engagements, employment contracts) evenly and progressively tax.

According to the first variant of the reform, the nominal tax rate would be increased from 10 to 15 percent with raising the non-taxable amount from 18,300 to 26,000 dinars per month, while according to the second the nominal tax rate would be increased from 10 to 20 percent and the non-taxable threshold from 18,300 to 40,000 dinars. per month.

By Editor

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