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The Government of the Republic of Serbia

In the service of citizens

Set of anti-crisis measures, tax policy reform in September

Belgrade, 15 August 2012

Deputy Prime Minister and Minister of Foreign and Home Trade and Telecommunications Rasim Ljajic announced that the government is preparing a set of anti-crisis measures for September, which will imply radical savings on the state’s part and shift the burden of the crisis onto the wealthiest part of the population.

Author: novosti.rs

In an interview for today’s issue of Vecernje Novosti daily, Ljajic said that the government will also implement a reform of the tax policy to make sure that those who earn more also give more to the state, affirming that there will be no increase in the price of bread or VAT on foodstuffs.

The hardest test for this government will be neither Kosovo nor Europe, but the battle with the crisis as it will have to find a way to secure a better life for citizens, the Minister observed.

On the basis of this problem, this and every other Serbian government will either succeed or fail. We are preparing a set of anti-crisis measures for September in which the crucial point will be the state’s radical savings and shifting the burden of the crisis onto the wealthiest part of the population, the Deputy Prime Minister announced.

There are two ways to resolve the huge deficit in the state budget – the first is to save as much as possible, and the second is to find a model to increase revenues which are far below the projected figures.

There is a lot of room for manoeuvring – from cutting down agencies, the number of which no one really knows, but they definitely exceed 160, to limiting salaries in the public sector by introducing the ceiling of RSD 165,000. Travel expenses of state officials and the use of official cars also offer opportunities for saving, Ljajic said.

Apart from saving, we must also find additional sources of financing, he added.

No state, including Serbia, can overcome the crisis lest it increases export, and in order to do that, we must have a competitive product. The other possibility is to draw foreign investments, which is everything but easy at the moment, he said adding that it is crucial for the economy to maintain a predictable dinar exchange rate.

Ljajic stressed that the sale of Telekom is currently not being considered, adding that the idea is to modernise Telekom and professionalise its management in order to help the company survive the competition.

He observed that a VAT increase will be the last resort and that VAT on foodstuffs will definitely not be increased.

After a detailed analysis the government will decide whether VAT should be raised to 20%. This analysis will show if this is the only way to garner additional revenues, the Minister observed.

When it comes to the price of bread, he said that dialogue with bread producers will be continued, adding that for the time being there are no reasons for increasing the price of bread.

The situation will remain unaltered until 30 September, for as long as the decree on the limitations of the margin remains in force. After that we will see where we stand with corn, but the fact is that this year’s wheat yield will not meet our own needs. The yields of maize, soy and sunflower are also lower than last year’s, which can affect the price of fodder, and in turn the price of meat, Ljajic explained.