Analysis 27 Jun 17

No Action on Tax Cut for Serbia's Lowest Paid

Reducing the tax burden on low-paid jobs is widely supported, but the issue of who will pay for it continues to delay reform.

Stevan Veljovic

Nebojsa Atanackovic, president of the Serbian Association of Employers, said that reducing the tax burden is one way to increase wages and investment. Photo: Beta

Serbian entrepreneurs have heard many promises and proposals about cutting the tax burden on employing staff in order to create a more favourable environment for business and employment.

It is argued that if employers did not have to pay so much tax it would make job creation easier, especially for low paid work, while reducing the number working in the shadow economy and, therefore, not paying contributions.

Before ending his mandate as prime minister, Serbian President Aleksandar Vucic hinted several times that the government intended to reduce taxes and contributions on salaries, in order to boost employment and help turn jobs in the shadow economy into registered employment.

“One, two, three or four per cent – I think we can do that. It remains to be seen, the government will make a more accurate assessment and it would be good to discuss it with the IMF and the Fiscal Council because we don’t want to jeopardize what we achieved so far [in reducing the budget deficit],” Vucic said in an interview for TV Prva in May.

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