Fiscal Council proposes progressive taxation as poverty-reduction measure

As one of the poverty-reducing measures, the Fiscal Council has proposed progressive taxation, i.e. people who earn more money should pay higher taxes.

The Council also proposes for the non-taxable part of the salary to double to 40,000 dinars and that employees are entitled to a non-taxable amount of 20,000 dinars for each dependent member of the household.

With a simple calculation, we arrive at an annual savings of about 200 euros, which is how much a worker on the minimum wage would cost the employer less in 2023. Economic experts have positively evaluated this proposal, but also point to possible pitfalls in its practical application.

Doubling the tax-free part of salary to 40,000 dinars, introducing a tax-free amount of 20,000 dinars for each dependent family member and raising the payroll tax from 10 to 15 percent is the essence of the personal income systemic reform proposed by the Fiscal Council.

According to Nikola Altiparmakov, a member of the Fiscal Council, the new way of taxing wages would help more than 80 percent of middle-class and lower-income households, while the remaining 20 percent of households with the highest income would have a minimal tax increase.

Bojan Stanić, assistant director of the Department for Strategic Analysis of the Serbian Chamber of Commerce, points out that the Chamber has been advocating for years to reduce the tax burden on employers, successively from 63 to 46 percent. Srđan Drobnjaković, director of the Union of Employers of Serbia, evaluates the Fiscal Council’s proposal as good, but is still concerned about its implementation in practice.

Using publicly available calculation methods, N1 has calculated how much payroll tax and contribution employers would save.

On a net salary of 40,000 dinars, the monthly savings would be 2,417 dinars – this is how much less a worker on the minimum wage would cost his employer if the new calculation proposed by the Fiscal Council is applied. Annually, this amounts to 29,004 dinars or 247 euros.

Half of the employees in Serbia work for a salary that does not exceed 56,000 dinars. For them, the monthly reduction would amount to 381 dinars per month or 4,572 dinars per year.

The employees who earn 120,000 dinars per month, would pay 7,764 dinars more in tax and contributions, while those who earn 240,000 dinars, would pay 23,035 dinars more.

(N1, 07.10.2022)


This post is also available in: Italiano

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