If it wants to increase the standard of all citizens, why doesn't the Government, instead of redistributing a part of pension contributions, simply reduce the VAT rate, asked the President of Montenegro, Jakov Milatović.
He pointed out that a lower VAT would reduce all prices and increase the purchasing power of all citizens, as well as improve the competitiveness of the economy and stimulate economic growth.
"Since there is no public discussion regarding the Europe Now 2 program, I ask the Government another question (although I didn't get an answer to the last one either) - why doesn't the Government reduce VAT instead of reducing contributions to PIO?
The government proposed to increase the average net salary by 6% through the reduction of pension contributions. With the proposed reduction in contributions, the Government, without public discussion and wider consultation, as well as without the consent of social partners, calls into question the pension system of intergenerational solidarity and the concept of pension as an economic one," wrote Milatović on the X social network.
He added that at the same time, the government intends to compensate for the deficit in public finances by increasing VAT and other duties, on tourism, on wines, on online trade, on culture, etc. which, according to Milatović, additionally contributes to the already intolerable increase in prices.
"In fact, we are witnessing that price growth has already completely eaten up the announced salary increase, which is why the expected positive effects are absent, unlike the created risks that become an integral part of the pension system.
If you want to increase the standard of all citizens, why not simply reduce the VAT rate instead of redistributing a part of pension contributions?", asks the President of Montenegro.
He believes that the logic is the same, that lower taxes (or contributions) would stimulate demand and economic activity, the negative aspects are more or less the same as in the case of a reduction in contributions, however there are more positive effects in the case of a reduction in VAT.
"Lower VAT would reduce public prices and increase the purchasing power of all citizens (both employees, pensioners, students, and the unemployed...). Also, reducing VAT would improve the competitiveness of the economy and stimulate economic growth. It does not mean that this proposal is the only solution , but I know that Montenegro needs a public discussion about this and other economic policies, not their hasty and non-transparent adoption," concluded Milatović.
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