Montenegro is in a deep financial crisis, and the announced increase in VAT is the worst measure the government could opt for. Additionally, the greatest deal of the tax debt has remained in tycoons’ pockets, says SDP MP Rasko Konjevic in an interview with Pobjeda.
Increasing the VAT rate, reducing social benefits and accelerating the increase in excise taxes is just another confirmation that Montenegro is in a serious financial crisis, resulting from the erratic economic policy based on the sale of vital resources and tolerance of tax indiscipline, Konjevic explains.
“The public debt with its growing trend is a millstone around future generations’ neck. Unfortunately, in the next three years, the government will borrow additional €1.5bn, which clearly confirms the picture of the financial crisis… The measures have been adopted with no serious public debate, presenting arguments, consulting professional associations or interested public. The fiscal strategy has not passed public hearing. The fact is that we are in some kind of informal arrangement with the IMF in order to get their support to ‘help’ about future borrowings because the country’s credit rating is low and financial investors lost their confidence due to poor performance,” Konjevic says.
He points out that the effects of the proposed measures will be incomparably weaker than the amount of tax debt.
“Government expect €250m effects from two iterations, whereas the tax debt amounts to €800m. Instead of rigorously resolving tax debt, the government has opted for imposing new burden to economy and common people,” he says.
Konjevic adds that “increasing in VAT is the worst measure that the government could take”.
“Contrary to the deputy prime minister Simovic’s announcement in 2016 that there would be no VAT increases, as that would negatively affect citizens’ living standard, it is exactly what happens. All citizens will feel the increase in this tax. All products or service that fall within the increased VAT rate will be more expensive. This will reduce the purchasing power of citizens, affecting the reduction of personal consumption,” Konjevic said.
