Five Types of Para-fiscal Charges that Smother Citizens and Businesses

NALED’s research has shown that 52% of business people in Serbia consider para-fiscal charges to be the second largest burden on business, behind salary taxes and contributions. The para-fiscal charges include fees for which the state does not provide any service, or the value of service does not correspond to the paid amount.

NALED has been pointing out this problem for many years and has so far recorded 384 non-tax fees, of which 247 are considered para-fiscal, with 72% of these levies being in the jurisdiction of the state administration. However, since 2012 when 138 taxes and fees have been abolished based on NALED’s analysis, including signage fee for entrepreneurs, the state has not done much on this reform. The National Program for Countering Shadow Economy has set new deadlines for finally resolving this problem.

"As a member of the working group, NALED is working with the Ministry of Finance to ensure that by the end of the year, the Government adopts a Law on Fees for the Use of Public Goods and changes the tax regulations in order to regulate the questions of who can introduce and determine the amount of fees and charges, and how. In order to solve the issue of para-fiscal charges in a sustainable way, NALED proposes the introduction of a publicly accessible online register that will contain all the fees that have the approval of the Ministry of Finance and which as such can be charged. For everything outside the registry, businesses and citizens would not be obligated to pay, and this would introduce transparency and self-regulation of para-fiscal charges," says Frederic Aubet, Executive Director of CRH Serbia, a member of the Fair Competition Alliance, adding that NALED recorded five typical types of para-fiscal charges:

The fee amount does not reflect the value of the service received - The construction land development contribution best reflects the definition of para-fiscal charges, because when paying this tax, no state service of adequate value is received. The amount of contribution in cities, where infrastructure has already been largely built, is considerably higher than for in villages where more investments are needed to supply water, sewage or roads, rather than the costs being reversed.

Local taxes and general-purpose charges - Environment protection fees are examples of para-fiscal charges levied by local governments. This is a fee that by its nature actually represents a tax. The money generated from this fee is not directly aimed at protecting the environment but goes to the general budget, like other taxes. One of the most famous fees similar to environment protection fees is the signage fee for displaying business name in public space, which is still paid by large companies.

Payment according to value of buildings - The fee for obtaining a use permit is a typical para-fiscal charge because its value is determined as a percentage of the value of the building (0.2%). Furthermore, when the approval is issued for constructing a telecommunication facility, the fee goes up to 0.3% of the estimated value. It is evident that the method of determining the amount does not follow the actual costs borne by the issuing authority but the economic strength of the client. The good news is that the percentage determination should be abolished by amending the Law on Republic Administrative Fees.

Double fees - Citizens and businesses are often exposed to paying two taxes for the same service. One example is the fee charged by the National Bank of Serbia for the interpretation of regulations under its jurisdiction. The problem is there is already a state tax of 1,530 dinars for individuals and 12,490 dinars for legal entities. One of the two fees should be abolished.

Public company fees - Sectorial laws prescribing the obligations of public companies allow them to collect fees and charges in order to finance their business. The problem is that the areas where they can introduce the charges are set broadly. Thus, the Law on Environment Protection enabled the collection of fees in the field of "tourism, catering, trade, services ...". The epilogue is the Decision of Srbijašume corporation on fees for the Stara Planina Nature Park, which included 92 charges.

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