IMF REPRESENTATIVE FOR BIH ANDREW JEWELL: WE DON’T CONSIDER THAT TEMPORARY ELIMINATION OF EXCISE DUTY, VAT REDUCTION AND LOWER ELECTRICITY PRICES IS JUSTIFIED

SARAJEVO, FEBRUARY 14 (ONASA) – The resident representative of the IMF for Bosnia and Herzegovina, Andrew Jewell, pointed out that the institution is against the abolition of excise taxes on fuel, the reduction of VAT for basic foodstuffs and lower electricity prices.
“Regarding the temporary abolition of excise duties on fuel, at the time of our consultation in March 2022, we pointed out that such a policy could be considered. However, as fuel prices are much lower today, and inflation is on a downward trend, we do not consider it to be temporary Excise duty repeal justified,” Jewell said.
Speaking about the government’s moves during the energy crisis, he believes that, although both citizens and businesses in BiH have benefited from lower electricity prices, this policy is still expensive and unsustainable.
“Furthermore, in such situations, it is preferable to allow electricity prices to rise in line with the market, but then it is necessary to simultaneously compensate the most vulnerable categories of society. We are glad to see that the Republika Srpska has introduced block tariffs, where households pay different tariffs depending on how much of electricity they consume,” says Jewell.
He also assessed the non-introduction of a lower VAT rate for basic foodstuffs in BiH as correct.
“Bosnia and Herzegovina has one of the most efficient VAT systems in Europe, thanks in large part to the single VAT rate of 17 percent, which simplifies collection and reduces the possibility of fraud. A lower rate on basic foodstuffs is an expensive and poorly targeted instrument for providing benefits to households with lower incomes,” Jewell emphasized for Bloomberg Adria.
He believes that it is a better policy, in this sense, to provide targeted income assistance.