“No decrease of public sector salaries, pensions”
The problem of low funds in the budget can be solved without a nominal reduction of public sector wages and pensions, Fiscal Council’s Nikola Altiparmakov says.
Sunday, 19.08.2012.
12:42
BELGRADE The problem of low funds in the budget can be solved without a nominal reduction of public sector wages and pensions, Fiscal Council’s Nikola Altiparmakov says. He told Tanjug that the solution should be sought somewhere between the freezing and the current adjustment or indexation. “No decrease of public sector salaries, pensions” Fiscal regulations in the Law on the Budget System envisage that in October, public sector salaries and pensions should be adjusted to the growth of the retail prices (inflation) over the past six months, while the previous increase calculations took into account the GDP growth. Altiparmakov recalled that the Fiscal Council had already warned that public sector salaries and pensions could not be fully adjusted to the inflation due to the gravity of the economic situation, which will remain valid in the next year and a half. “The authorities said that pensions will not be frozen but would rather be adjusted to the economy's potentials,” he noted and added that an economically sustainable solution could be found and a social compromise between freezing and indexation. Altiparmakov said that the announced increase of certain taxes was economically justified but that this was not sufficient for the reduction of budget deficit. “Savings need to be made in terms of cuts in budget expenditures and not by increasing revenues by a hike in taxes so as to ensure sustainability of fiscal consolidation and the Serbian economy, he recalled and added that having in mind the gravity of the situation and the limited time since a cut in expenditures calls for a systemic solution, the Fiscal Council suggested that taxes should only partially increase,” he recalled. He noted that he could not voice an assessment of the announced consolidation measures because no tangible tax measure had been presented to the public yet, and added that the announced increase of the corporate income tax from 10 to 15 percent, the increase of VAT from 18 to 20 percent and the increase of excise duties constituted economically justified measures. Altiparmakov said that the announced measures were a part of the good economic and tax policy, having in mind the situation in the economy and the need for increasing budget revenues within a short period of time. “Still, the measures aimed at reduction of public consumption remain the main issue and these will be the key to the sustainability of public finance,” Altiparmakov said. Tanjug
“No decrease of public sector salaries, pensions”
Fiscal regulations in the Law on the Budget System envisage that in October, public sector salaries and pensions should be adjusted to the growth of the retail prices (inflation) over the past six months, while the previous increase calculations took into account the GDP growth.Altiparmakov recalled that the Fiscal Council had already warned that public sector salaries and pensions could not be fully adjusted to the inflation due to the gravity of the economic situation, which will remain valid in the next year and a half.
“The authorities said that pensions will not be frozen but would rather be adjusted to the economy's potentials,” he noted and added that an economically sustainable solution could be found and a social compromise between freezing and indexation.
Altiparmakov said that the announced increase of certain taxes was economically justified but that this was not sufficient for the reduction of budget deficit.
“Savings need to be made in terms of cuts in budget expenditures and not by increasing revenues by a hike in taxes so as to ensure sustainability of fiscal consolidation and the Serbian economy, he recalled and added that having in mind the gravity of the situation and the limited time since a cut in expenditures calls for a systemic solution, the Fiscal Council suggested that taxes should only partially increase,” he recalled.
He noted that he could not voice an assessment of the announced consolidation measures because no tangible tax measure had been presented to the public yet, and added that the announced increase of the corporate income tax from 10 to 15 percent, the increase of VAT from 18 to 20 percent and the increase of excise duties constituted economically justified measures.
Altiparmakov said that the announced measures were a part of the good economic and tax policy, having in mind the situation in the economy and the need for increasing budget revenues within a short period of time.
“Still, the measures aimed at reduction of public consumption remain the main issue and these will be the key to the sustainability of public finance,” Altiparmakov said.
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