Progressive income tax hasn’t been introduced yet

Photo: sdsm.org.mk (print screen)

SDSM’s promise made for the snap general elections (December 2016) saying that in the first six months in office, higher property tax will be introduced for the wealthiest and the poor will pay less, hasn’t been fulfilled so far (10 September 2018).

 

We are going to introduce a fairer personal income tax (the additional rate will be only applied to citizens in the highest 5% of the income);

We are going to introduce a higher property tax for the wealthiest and higher excise rate for luxury vehicles. The poorer population is truly going to pay less than the wealthy. Application of these tax changes will begin in 2018.

[Source: SDSM’s pre-election program (2016) Plan for Life in Macedonia (page 208), date: December 2016]

 

EXPLANATION:

SDSM’s promise made for the snap general elections (December 2016) saying that in the first six months in office, higher property tax will be introduced for the wealthiest and the poor will pay less, hasn’t been fulfilled so far (10 September 2018).

This electoral promise of the social democrats can be found on several pages throughout their pre-election program Plan for Life in Macedonia. Firstly, it’s mentioned on page 5, whereon they promise fair tax system:

We are introducing fair taxes. The poor are going to pay less, while the wealthy more.

Then again, on page 17, section Five pillars, not 100 steps explains SDSM’s plan to erect 5 pillars which seek to diminish certain inequality shapes in Macedonia and that the second pillar provides “fair taxation and societal system”.

Its aim is to introduce changes in the taxation system and the social transfers system, which will start diminishing the unequal distribution of the available income in Macedonia. The fair taxation system is supposed to introduce lower tax rates for the poor, and higher for the wealthy.

Moreover, chapter Fair taxation and societal system, section Fairer personal income tax, page 47, provides a more detailed explanation of the promise that the poor are going to pay less than the wealthy:

We are going to introduce fairer personal income tax with two rates (10% and 18%), which will include tax refund to citizens with very low monthly incomes.

  • Citizens who have total monthly personal income up to the level of the legally determined minimum salary will receive refund of the amount that has been previously paid by employers as personal income tax.
  • The 5% of citizens with highest tax base will be introduced to a tax rate of 18% of the amount of the additional income. The threshold is going to be defined in absolute amount based on the tax declarations for 2016.
  • The current personal income tax rate of 10% will remain applicable to great majority of the citizens.
  • The reduction of the personal income tax base applied by article 10 of the respective law will be applied in the future as well.

The very same promise forms part of the Plan 180 – urgent reform priorities of the new Government in the first 6 months, section New jobs, more money for the citizens, support of domestic companies (page 208).

Furthermore, the Program of Government (2017-2020) comprises this promise of the social democrats on page 2, within the Fair taxation chapter, which states that the Government aims at providing more fairness in the taxation system in the next four years by correcting the unfair distribution of income and societal wealth. In this regard, it is said that the changes in the taxation system will be applied by implementing multiple measures, and the first one is introduce a fairer personal income tax with two rates (10% and 18%)”, i.e. exactly the same promise laid down in Plan for Life in Macedonia.

Although the incumbent government assumed office more than a year ago (15 months ago), these plans haven’t been realized so far (10 September 2018).

In a press conference from 9 September 2018, Prime Minister Zoran Zaev said that the tax reform – introducing progressive personal income tax – has been postponed due to the referendum on the Agreement with Greece.

We have postponed the tax reform, because it would have been concealed, the referendum debate is still ongoing and we don’t want to make decisions. The Agreement with Greece itself surfaced the need for postponement of the tax debate, which should have occurred during the summer. But that’s when the Agreement with Greece occurred. The tax reform debate will most probably continue after the referendum. I’m а leftist and I deem that fair taxation is needed, those who have more ought to pay more, while those who have less ought to pay less. If only everybody had more. But, if there is no time for implementation by the end of the year we won’t rush with anything, we want to give time for the preparation of such tax reform and the economy and citizens as well (Zaev)

Therefore, given that the tax reform has been postponed, and the anticipated deadline for introduction of fairer taxation (the first six months of the term) has expired, we assess SDSM’s aforementioned promise as unfulfilled.

SOURCES:

Assessed by: Olivera Vojnovska

 


This article was created within the framework of the Project to increase the accountability of the politicians and political parties Truthmeter implemented by Metamorphosis. The article is made possible by the generous support of the National Endowment for Democracy(NED) and The Balkan Trust for Democracy (BTD), a project of the German Marshall Fund of the United States, an initiative that supports democracy, good governance, and Euroatlantic integration in Southeastern Europe. The content is the responsibility of its author and does not necessarily reflect the views of Metamorphosis, National Endowment for Democracy, the Balkan Trust for Democracy, the German Marshall Fund of the United States, or its partners.