Luxury costs: B&H refuses to tax the rich

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Source eKapija, 23. 07. 2010.
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	VLADA UKRAJINE.
	Vlada Republike Bugarske.
	J.P. Željeznice Federacije BiH d.o.o. Sarajevo.
	Željeznice RS a.d. Doboj.
	Vanjskotrgovinska komora BiH/Foreign Trade Chamber of BiH Sarajevo.
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The huge budget deficits arising from the global financial crisis, forced the government of some countries to introduce a special tax on luxury goods, as a measure of ensuring extra income.

The last ones to do it were the governments of Ukraine and Bulgaria, since the system has been working successfully for years in developed Western countries. In Bosnia and Herzegovina however, such taxes have not been brought up, while the gaps in government budgets are plugged mostly by increased prices targeting citizens.

Plenty examples supports that statement, with some of the recent ones being the final decision by local authorities to increase the cost of fuel, to cover the losses for national companies Zeljeznica FBIH and RS (Railways of the Federation and RS).

Bosnia and Herzegovina is a country that favors luxury goods and those that can afford such products, says Igor Gavran, economic expert and project coordinator at the Foreign Trade Chamber of B&H. And while the developed countries apply taxes on luxury goods our country is concerned about this kind of taxation increasing the black market.

"If you look at the statistics, for example on the import of gold in Bosnia and Herzegovina, it is clear that most of the gold is imported illegally because there is no way that these rather insignificant and small figures shown in the records are true. Many luxury products that could be taxed are in good part entering Bosnia illegally , which means that such taxes would only further increase smuggling, "said Gavran in an interview for eKapija.

He believes that, given the life standard of our citizens and the participation of luxury products in the total turnover, the effects achieved by the eventual levy would not have been spectacular. The only luxury products that would actually lead to an increased revenue if they were to be taxed are luxury cars.

"This is something interesting to think about, so that the additional excise duties which exist for example in Croatia and other countries, would be justified and welcomed. But unlike other states, the biggest buyers of luxury commodities are the authorities and the government itself. Paradoxically, it would turn out that it is the government that pays the levy, "said Gavran.

Taxation of luxury goods is regulated the best in the Scandinavian countries, which are famous for their social sensitivity, and programs that protect the vulnerable and underprivileged groups.

They go as far as to discriminate against the rich in terms of tax reduction or exemption for the poor. Other countries also aspire to high-rate taxes on luxury goods and high incomes.

Our public authorities also discussed the matter saying that after all it is not logical to have the same taxes on bred and medical drugs on the one hand, and yacht and planes on the other.

N.V.