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Volume 18
Issue 1
Online publication date 2018-06-22
Title The tax reform in a function of a real depreciation and higher competitiveness level
Author Zeljko Maric
Bosnia and Herzegovina intends to become a member of the EU, and then to join the EMU. A key issue for B&H is to achieve a higher level of competitiveness to increase potential benefits and reduce the potential costs of membership in the single eurozone market. The subject of this paper is an analysis of economic policy measures to increase the competitiveness of the B&H economy for the monetary union and the introduction of the euro. Due to the currency board rules, fiscal policy and tax reform have a relatively high importance in creating greater competitiveness. B&H cannot apply nominal devaluation, but real depreciation has to be achieved by measures of structural reforms of internal adjustment. Internal adjustment, i.e. deflation as a way of real depreciation and creating greater competitiveness, should be implemented through fiscal consolidation and tax reform. A simple, efficient and relatively more competitive tax system is the basis for the faster economic development of the B&H economy towards EU.  The aim of this paper is to propose the direction of economic policy, especially fiscal consolidation and tax reforms to adopt B&H's economy for potentially higher benefits and lower costs, up to the final entry into the EU and EMU.

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Keywords Tax reform, taxation of labour, taxation of consumption, Bismarck's vs. Beveridge's model, real depreciation, Bosnia and Herzegovina.
Pages 1-13
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