A new attempt to reform non-tax and parafiscal levies

Almost two years have passed since NALED, KPMG, the Mihajlo Pupin Institute and Partner Solutions, with the support of USAID, created a register of non-tax levies and recorded more than 2,000 duties paid by citizens and the economy and submitted it to the Ministry of Finance. The goal was for the relevant ministry to turn it into an official list of all fees and charges and pave the way for the reform of non-tax levies and the abolition of parafiscals. The epilogue is that we still do not have a public register, and the number of fees, charges and parafiscals has not decreased either.

Given that the Ministry of Finance has repeatedly pointed out the complexity of establishing and maintaining a register of non-tax levies, NALED now proposes an alternative solution that is in line with the Government's goals, relieves the administrative burden on the economy and citizens, and in the long term enables the achievement of the goals of the reform of non-tax levies, such as are greater business predictability and cost reduction.

- We suggest that authorities be required to enable the collection of all non-tax levies electronically on the eAdministration Portal. In this way, we would indirectly make a census because we would have records and amounts of all duties, as well as the formulas by which their amount was determined. On the other hand, citizens and the economy would be left with the option to pay them at the post office or bank - says NALED's program director Jelena Bojović and adds that to introduce such an obligation, it would be necessary to amend the Law on the Budget System.

When it comes to regulating the collection of non-tax duties that are the responsibility of local governments, NALED's proposal is to prescribe a single model Decision on local administrative fees for all 145 cities and municipalities that have the authority to collect non-tax duties. This would standardize the practice of introducing and determining the amount of fees, and local governments would not lose income, while citizens and the economy would gain transparency and predictability of the costs they face.

- And the third proposal is to support the Republican Secretariat for Public Policy in the further development of the register of administrative procedures and that through that register all procedures for both the economy and citizens are linked with the fees or fees that must be paid. It is important that this registry is also connected to the eGovernment Portal and the ePay service - adds Bojović.

NALED's idea is to implement this initiative in phases, i.e. to first select one local self-government and state authority for which the payment of non-tax duties from their jurisdiction would be introduced on the eGovernment Portal, while the Office for IT and eGovernment would develop a software solution for payment service. In parallel with that, the Law on the Budget System should be amended, with the prescription of a phased approach by groups of authorities for which a system of electronic payment of non-tax dues would be established within a period of two years.

Establishing the possibility of electronic payment of fees and charges on the eGovernment Portal would also open up space for the development of an analytical tool that would enable the automatic recording of all fees, charges, compensations and other non-tax duties, as well as a more detailed analysis of the costs of implementing procedures or providing a certain service by users of public funds, in order to further improve the current system of non-tax duties.

As part of the "Project for the reform of non-tax revenues", NALED, KPMG, the Mihajlo Pupin Institute and Partner solutions determined that taxes, fees and other non-tax duties are prescribed in about 500 different laws, as well as in about 400 decisions of local governments. There are more than 1,200 levies under the jurisdiction of the republican level of government, while the number of levies levied by local governments is unknown, bearing in mind that not all decisions on local administrative taxes are publicly available.

Taxes are the most numerous among non-tax duties (75% of the total number), although they make up only 25% of total collected revenues. During the project, recommendations were made for the abolition of certain fees, the reduction or equalization of their amount and the change of name according to their actual fiscal nature, i.e. reclassification into taxes. The key recommendation in all analyzes related to the establishment of a public, electronic register of non-tax duties (primarily taxes) of all levels of government, while respecting the principle that no duty can be charged if it is not entered in the register.