"Shift tax burden from income to spending"

God preserve us from these amateurs. All studies show that increasing VAT hits the poor the most, and he is advising increasing VAT at a time when consumer spending is so low that it is threatening another recession.

God knows on the Serbian part of the site we can read how Serbians are travelling to Hungary in numbers not seen since the sanctions of the 90's. They go there on shopping trips, for clothes yes, but for food as well. Putting VAT up will mean that more Serbians will be forced to take those trips and spend their money in other countries. It will also mean that the high street will take a further hit and some retailers in Serbia would be forced to close.

And talking about increasing excise taxes (when most goods are overpriced as it is), whilst at the same time talking about increasing exports is a complete joke. Increasing taxes on imports will always be answered in kind by countries that Serbia exports to, so Serbian exports will go down as a result.

The tax system in Serbia needs some reform, but raising VAT (particularly at this time) is not the answer, it will make things much worse.

Bganon is correct; VAT (PDV in Serbian) is a tax on the poor. Unemployed people pay no income tax and cannot benefit by a cut in that tax, but they must eat and clothe themselves and their families. Everything they buy will be more expensive.

What Serbia needs is banking and currency reform. All private banks in Serbia create money out of thin air. If they have 100 euros in “assets,” they can lend 1000 euros at interest. Where did this extra 900 euros come from? It was just created on the bank’s balance sheet. What right do private banks have to charge interest on money they merely “invented?”
There is nothing wrong with “inventing” money in this way, but it should not be done by privately owned banks for private gain. If a private Serbian bank wants to lend 1000 euros to a customer, it can borrow this money at interest (say 2%) from the National Bank of Serbia (NBS). The NBS gets this money by creating it on their balance sheet (just as private banks are now doing.) The private bank can then re-lend this money to its customer at a modest rate of, say 4%.

The NBS can only do this with Dinars. The NBS controls Dinars; the Americans control Dollars; and the Germans control Euros. Serbia should do all its internal business in Dinars and not in currencies control by foreigners.

If the NBS took 2% of all loans made in Serbia, then this money would cover most (possibly all) government spending.

Taking money creation out of the hands of private banks could mean that Serbs would pay no income tax or VAT.

"God knows on the Serbian part of the site we can read how Serbians are travelling to Hungary in numbers not seen since the sanctions of the 90's. They go there on shopping trips, for clothes yes, but for food as well. Putting VAT up will mean that more Serbians will be forced to take those trips and spend their money in other countries. It will also mean that the high street will take a further hit and some retailers in Serbia would be forced to close. "
(bganon, 20 December 2011 15:41)

I agree that VAT rises hit more the people who spend all their money than people who have enough money (and are not spending everything they earn). Though rich people tend to buy more luxury products. Maybe some 'luxury tax' would be an idea, some of the Skandinavian countries have them for big cars and other products. On the other hand, the 18% VAT in Serbia is lower than in Hungary. So whatever the reason for the higher retail prices in Serbia and the need for shopping trips to Hungary might be: It can't be the VAT. I experienced the average price for food is higher in Serbia than in the EU. How can this be, I wonder? Locally produced food like dairy products, bread, cookies, vegetables, fruits ... and so on should be less expensive. For me, the reason for this can only be found in the lack of competition, monopolies, and/or non-existing food discounters, like you have in many European countries: They kept the prices for the basic needs below the inflation rate over the last decade.

I'm confused by all of this.

First of all, the entire tax liability is on companies FOR their employees.

It seems to me (please correct me if I'm wrong), but if I don't register my employees for their taxes (and pay them), they don't have to.

This is a strange orientation from communism that treats people like children rather than responsible adults.

Secondly, in Serbia, there's dozens of stupid taxes that have nothing to do with income. For example, as a company, I have to pay a tax for fulfilling my legal obligation for having my name on my mailbox (no joke). Serbia should get rid of all of these stupid fees. They hamper investment just from the "huh?" factor.

Thirdly. Serbs already pay almost TWENTY PERCENT consumption taxes. This American think-tank (where, btw, you don't see these kind of sales taxes higher than a few percent in most states, and there's no national sales tax), is telling Serbia to raise their already-high sales taxes?

WTH, this American think-tank is trying to make some kind of experiment out of Serbia with this wacky idea.

Fourthly. whoever said "sales taxes are punishing on the poor", is only partly right. That's why most governments who raise sales taxes institute some kind of rebate program for people under a certain cut-off. In general, it's richer people that pay more consumption taxes, because they buy more stuff.

There is something seriously wrong with how Serbia collects taxes (and imagines taxes), but this think-tank does not have the answer.

Serbia needs to get rid of stupid "tax for business to have a sign on their mailbox" type taxes. Serbia needs to re-orientate it's tax obligation to people, not companies on behalf of their employees. Current system give employers too much opportunity to manipulate their employees in various sleazy ways. It should be more like it is in the US. Employer pays you GROSS (and makes deductions), but you, the INDIVIDUAL is ultimately responsible. I think this communistic way of having companies responsible on behalf of their employees ultimately results in the state and companies treating people like children. As a result, people start thinking and acting like children. Make the individual responsible and it will empower the individual - something Serbia desperately needs these days.

I'm confused by all of this.
(Danilo, 20 December 2011 17:47)

You are constantly confused and not only by this.

First of all, VAT might be 18% but when you import something you also pay ridiculous duty. That is why a 32" Samsung TV in Serbia (ON SALE) costs 32,500 dinars, and in hungary you can buy that same exact model tv for 24,000 dinars (minus 25% off tax back!)

AND THEY WANT TO RAISE TAXES? This place is already one of the most expensive countries to buy ANYTHING!

Instead of raising taxes, they should invest more into overseeing where the politicians spend their cash on, I'm very sure they don't need all the latest Audi's to move their precious behinds around!

I'm confused by all of this.
(Danilo, 20 December 2011 17:47)

You are constantly confused and not only by this.

Bganon is correct; VAT (PDV in Serbian) is a tax on the poor. Unemployed people pay no income tax and cannot benefit by a cut in that tax, but they must eat and clothe themselves and their families. Everything they buy will be more expensive.

What Serbia needs is banking and currency reform. All private banks in Serbia create money out of thin air. If they have 100 euros in “assets,” they can lend 1000 euros at interest. Where did this extra 900 euros come from? It was just created on the bank’s balance sheet. What right do private banks have to charge interest on money they merely “invented?”
There is nothing wrong with “inventing” money in this way, but it should not be done by privately owned banks for private gain. If a private Serbian bank wants to lend 1000 euros to a customer, it can borrow this money at interest (say 2%) from the National Bank of Serbia (NBS). The NBS gets this money by creating it on their balance sheet (just as private banks are now doing.) The private bank can then re-lend this money to its customer at a modest rate of, say 4%.

The NBS can only do this with Dinars. The NBS controls Dinars; the Americans control Dollars; and the Germans control Euros. Serbia should do all its internal business in Dinars and not in currencies control by foreigners.

If the NBS took 2% of all loans made in Serbia, then this money would cover most (possibly all) government spending.

Taking money creation out of the hands of private banks could mean that Serbs would pay no income tax or VAT.

God preserve us from these amateurs. All studies show that increasing VAT hits the poor the most, and he is advising increasing VAT at a time when consumer spending is so low that it is threatening another recession.

God knows on the Serbian part of the site we can read how Serbians are travelling to Hungary in numbers not seen since the sanctions of the 90's. They go there on shopping trips, for clothes yes, but for food as well. Putting VAT up will mean that more Serbians will be forced to take those trips and spend their money in other countries. It will also mean that the high street will take a further hit and some retailers in Serbia would be forced to close.

And talking about increasing excise taxes (when most goods are overpriced as it is), whilst at the same time talking about increasing exports is a complete joke. Increasing taxes on imports will always be answered in kind by countries that Serbia exports to, so Serbian exports will go down as a result.

The tax system in Serbia needs some reform, but raising VAT (particularly at this time) is not the answer, it will make things much worse.

I'm confused by all of this.

First of all, the entire tax liability is on companies FOR their employees.

It seems to me (please correct me if I'm wrong), but if I don't register my employees for their taxes (and pay them), they don't have to.

This is a strange orientation from communism that treats people like children rather than responsible adults.

Secondly, in Serbia, there's dozens of stupid taxes that have nothing to do with income. For example, as a company, I have to pay a tax for fulfilling my legal obligation for having my name on my mailbox (no joke). Serbia should get rid of all of these stupid fees. They hamper investment just from the "huh?" factor.

Thirdly. Serbs already pay almost TWENTY PERCENT consumption taxes. This American think-tank (where, btw, you don't see these kind of sales taxes higher than a few percent in most states, and there's no national sales tax), is telling Serbia to raise their already-high sales taxes?

WTH, this American think-tank is trying to make some kind of experiment out of Serbia with this wacky idea.

Fourthly. whoever said "sales taxes are punishing on the poor", is only partly right. That's why most governments who raise sales taxes institute some kind of rebate program for people under a certain cut-off. In general, it's richer people that pay more consumption taxes, because they buy more stuff.

There is something seriously wrong with how Serbia collects taxes (and imagines taxes), but this think-tank does not have the answer.

Serbia needs to get rid of stupid "tax for business to have a sign on their mailbox" type taxes. Serbia needs to re-orientate it's tax obligation to people, not companies on behalf of their employees. Current system give employers too much opportunity to manipulate their employees in various sleazy ways. It should be more like it is in the US. Employer pays you GROSS (and makes deductions), but you, the INDIVIDUAL is ultimately responsible. I think this communistic way of having companies responsible on behalf of their employees ultimately results in the state and companies treating people like children. As a result, people start thinking and acting like children. Make the individual responsible and it will empower the individual - something Serbia desperately needs these days.

"God knows on the Serbian part of the site we can read how Serbians are travelling to Hungary in numbers not seen since the sanctions of the 90's. They go there on shopping trips, for clothes yes, but for food as well. Putting VAT up will mean that more Serbians will be forced to take those trips and spend their money in other countries. It will also mean that the high street will take a further hit and some retailers in Serbia would be forced to close. "
(bganon, 20 December 2011 15:41)

I agree that VAT rises hit more the people who spend all their money than people who have enough money (and are not spending everything they earn). Though rich people tend to buy more luxury products. Maybe some 'luxury tax' would be an idea, some of the Skandinavian countries have them for big cars and other products. On the other hand, the 18% VAT in Serbia is lower than in Hungary. So whatever the reason for the higher retail prices in Serbia and the need for shopping trips to Hungary might be: It can't be the VAT. I experienced the average price for food is higher in Serbia than in the EU. How can this be, I wonder? Locally produced food like dairy products, bread, cookies, vegetables, fruits ... and so on should be less expensive. For me, the reason for this can only be found in the lack of competition, monopolies, and/or non-existing food discounters, like you have in many European countries: They kept the prices for the basic needs below the inflation rate over the last decade.

First of all, VAT might be 18% but when you import something you also pay ridiculous duty. That is why a 32" Samsung TV in Serbia (ON SALE) costs 32,500 dinars, and in hungary you can buy that same exact model tv for 24,000 dinars (minus 25% off tax back!)

AND THEY WANT TO RAISE TAXES? This place is already one of the most expensive countries to buy ANYTHING!

Instead of raising taxes, they should invest more into overseeing where the politicians spend their cash on, I'm very sure they don't need all the latest Audi's to move their precious behinds around!