In the past three and a half decades, pre-election campaigns were mostly about counting national blood cells and where someone's ancestor was, and this year most of the participants in the election focused on the economy and the race to see who would promise a higher increase in wages, pensions or some free services and reductions taxes.
At the same time, an increase in budget expenditures for wages, pensions, and social benefits is promised, and a reduction in taxes and other duties and thus budget revenues from which the previous increases should be paid. At the same time, legal and mathematical restrictions are forgotten.
In the next five years, Montenegro needs to pay back almost three billion euros of old debts, and the International Monetary Fund (IMF) and the World Bank warn that part of these debts must be paid back from current revenues. This means that the entire current income growth should be directed to repaying old debts, and Montenegro has an inherited credit rating just above the speculative level, so any new debt would be at extremely high interest rates.
In such a situation, it would be more realistic to expect to freeze budget expenditures, but MPs do not like to vote for such unpopular measures, and especially they would not talk about them in pre-election campaigns.
"News" provides an overview of some of the most impressive promises and how possible they are.
Reducing VAT to 9 percent would cost almost half a billion, DPS explained that it was a mistake
Reducing the current VAT rate from 21 to 9 percent would mean a decrease in state revenues by around 440 million euros. That is 20 percent of the current total state revenues. That sum is twice as high as the current spending on healthcare, and two and a half times higher than the part of the budget for social benefits. With that much money, all pensions for Montenegrin pensioners are paid for ten months. That sum is almost double this year's total capital budget. That's how much the next section of the highway would cost...
From that coalition led by the DPS, they did not state how they would compensate the state for those revenues or what expenses they would abolish in that amount. During the rule of the DPS, that tax was increased twice - from 17 to 19 and in 2017 to 21 percent, due to economic crises and an increase in budget expenditures due to a decrease in state guarantees given to private companies.
The DPS informed "Vijesti" today that by mistake in the public speech of their representative it was said that it was value added tax (VAT), when in fact it was a profit tax of nine percent.
They also added that in the photo "Plan for the next 4 years", which was published within the text, you can see a proposal about "reducing the corporate tax rate for legal entities from 9 percent and canceling the payment obligation for IT companies".
Seven days ago, in preparation of the topic, "Vijesti" sent a question to the DPS whether the statement on reducing the VAT to 9 percent is part of their pre-election program, but the answer did not arrive.
Europe now movement: In 12 months, the average salary is 1.000 euros, the minimum is 700, the minimum pension is 450 euros
In contrast to the first Europe now program, a political movement of the same name, from a year and a half ago, when it was stated that the contribution for health insurance and taxes and surcharges up to the amount of 700 euros of earnings will be excluded from the calculation of duties to be borne by the employee, and that on based on that, employers are obliged to increase net wages, now in the so-called "Europe now 2.0" there are no such measures.
It was not precisely stated on the basis of which the increase in wages and pensions is expected, nor was the "Europe Now 2.0" program presented at all. According to what they announce, they promise that, when they are in power, there will be a great economic growth that will allow employers to increase wages for workers and the state to increase revenues that will lead to wage growth in 12 months. This would mean that the average salary for 12 months, based on the good will of employers, would be increased by 27 percent.
Increasing the limit for the minimum pension is possible by amending the law in the Parliament, but setting it at a limit of 450 euros (the current average pension is 374 euros) would mean an increase in the expenditure of the PIO Fund by about 240 million annually.
An increase in the minimum wage from 450 to 700 euros per year is theoretically possible by amending the law, but the consent of social partners, ie employers, would be required beforehand. A year and a half ago, employers accepted an increase in the minimum wage from 250 to 450 euros, because at the same time the taxes on wages were significantly reduced, so it had a neutral effect for most of the economy. Part of the problem was employers from less developed municipalities who barely paid even the previous lower minimum wage.
Now, no reduction in payroll taxes is being announced, so that employers would accept this 55 percent increase in the minimum wage, that is, they would fully finance that growth, unless the contribution to pension insurance, which amounts to 20,5 percent of wages, is abolished.
The authors of the first "Europe Now" also made serious mistakes in their analysis because they announced that municipalities will have neutral effects due to the introduction of a non-taxable part of earnings. A significant part of the salary tax goes to municipalities and the Equalization Fund, from which underdeveloped local governments are financed, and the application of that solution created a hole in municipal finances of 50 million euros annually. Because of this, the Assembly had to make extraordinary changes to the income tax regulation, but even that was not enough - so part of the damage to the municipalities was compensated from the budget reserve and by taking over part of the local capital projects in the state budget.
Coalition Together DPS, SD, LP and DUA: In four years, increase the average salary by 50 percent, and the lowest pensions by 20 percent
That political alliance claims that thanks to their investment cycle of one billion euros, economic growth will be stimulated, which will create opportunities for that increase in wages and pensions. While they were in power, in the 14 years from the period of independence in 2006 to 2020, the average net salary, if the same methodology were used, increased by 52 percent with a simultaneous inflation of 40,6 percent. Now they promise to achieve a 50 percent increase in earnings in just four years. The current average net salary of 786 euros would thus be increased to 1.179 euros.
For example, during the four years of DPS rule, before the pandemic, from 2015 to 2019, the average salary increased from 489 to 520 euros or by 6,3 percent.
There is also a big mathematical error in that promise. Alignment - the increase in pensions depends on the increase in net earnings, and if net earnings were increased by 50 percent, the increase in pensions would have to amount to at least 75 percent of that increase. In other words, pensions would be increased by 37,5 percent and not by 20 percent, because pensioners would be significantly "deprived" by this DPS proposal.
Coalition for the Future of Montenegro: We will return a hot meal, transportation, holiday pay and winter leave, workers will receive a 13 percent higher salary immediately
Hot meal and holiday allowance are already included in the salary calculation according to Article 96 of the Labor Law and now amount to 70 percent of the calculation value of the coefficient, which is 63 euros gross or 53,3 euros net per month. There are also several legal bases in which employers are obliged to pay transportation compensation, while the payment of winter leave is left to be defined by branch or individual collective agreements. For example, for the state administration, the compensation for winter leave amounts to two calculation values of the coefficient, or gross 180 euros or net 152 euros.
Therefore, all these types of benefits are already provided for by the current regulations and cannot be returned, and any change to them would have to be previously agreed upon at the Social Council. If he wants to return to the method of calculation that was valid until 12 years ago, when the compensation for a hot meal and vacation was outside the net salary and taxes and contributions were not calculated on that amount, the employee would receive only 9,7 euros more. Which would be only 1,2 percent more on average net earnings. This would mean that the amount of net hot meal and holiday allowance of 53,3 euros is set aside from the worker's current salary, and that it is paid to him as an untaxed salary supplement in the amount of 63 euros. With such a return to the old calculation, the state and municipalities would lose an income of 9,7 euros per employee.
Courage is not counted in numbers
In the coalition of Democrats and URA "Hrabro se Broji" are very cautious in their promises and there is no data on increasing salaries and pensions by the exact percentages, but only that they will "raise the standard of living and the dignity of workers". Perhaps they are more cautious than others in their promises because one of the leaders of that coalition is now Prime Minister Dritan Abazović.
They announce the fight against organized crime, the reform of the judiciary, the establishment of a housing fund, the legalization of illegal buildings in installments, the construction of infrastructural facilities that have been in the plans for decades, etc... It is difficult to catch them in their statements for any clear information in their promises.
People's Coalition: Free legalization of illegal settlements
Free legalization would mean that the builders of those buildings do not pay a fee for communal arrangement, unlike those who built legally, which would put them in a privileged position.
At the same time, their settlements would receive legal status, and that municipality would have the obligation to urbanize them and build a complete communal infrastructure. Fees for communal arrangement that are paid during the construction of residential and commercial buildings are specifically set aside for the construction of communal infrastructure.
Someone would have to pay for the construction of infrastructure in illegal settlements, in this case legal builders, or the municipality would divert money from some other purposes for those needs. Earlier, it was proposed to enable them to purchase the usurped land under favorable conditions and to pay utilities in multi-year installments.
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