HoP Approves Higher Fuel Tax

Upper house of the Bosnian parliament passed a legislation set critical for unlocking a loan deal with the International Monetary Fund and forwarded it to the lower house for confirmation.

The House of Peoples approved the amendments to laws on the excise tax, the single tax collection account and revenue distribution and the indirect taxation, proposed by the Bosnian Council of Ministers.

On November 24, the Council adopted modified changes to the excise tax law and sent them to the parliament. The draft legislation was approved by entity level finance ministries and their respective prime ministers, as well as by members of the state level Council, following a series of consultations and with the active support of the EU mission in Sarajevo. A week earlier, the International Monetary Fund said it is not releasing funds to Bosnia until the parliament adopts a new law on excise taxes.

In September last year, the IMF approved a three-year 553.3 million euro loan to Bosnia to support the country’s economic reform agenda. However, the IMF delayed the release of the second loan tranche in May, after the authorities failed to meet the agreed reform targets.

If the amended legislation is approved by the House of Representatives, excise taxes will not increase as originally planned, except on biofuels; instead, motorway toll tax will rise by €0.08. The tax money will finance the construction of motorways and other types of roads, according to the government.

The opposition lawmakers in the parliament criticized the new legislation, citing insufficient guarantees that the tax money will be spent on roads, as well as some economists, who argued that the government, the EU and IMF are taking the line of least resistance and seek more money from taxpayers for road construction instead of cutting the government spending.

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