The struggle of young people in Serbia through the abolition of income tax

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Employers believe that companies will relieve their employee benefits.
The news that the obligation to pay annual income tax for under-40s will be abolished, but also that employees entering the labor market for the first time will soon be exempt from paying 70 percent of taxes on salaries for three years. For employers, this is a long-awaited move by the state, because in that way, companies will relieve their benefits for employees, and they will also be able to focus more on production and services.
At the same time, tax experts are a little less optimistic. Although, as they say, the abolition of the obligation to pay the annual tax is a newspaper in Serbia, they are still not quite sure that this measure will achieve the desired effect – the stay of young people in the country.
In addition to these two measures, the President of Serbia announced another one, and that is the exemption of taxes and contributions for research centers, which will also contribute, he said, to greater employment of young people and be an additional incentive for domestic companies to invest in those centers.
The Union of Employers of Serbia reminds that they have previously demanded the introduction of similar measures in order to tax salaries differently. As Nebojsa Atanackovic, the honorary president of the union, reminds, salaries can be the same, but the burden on salaries differs depending on whether, for example, it is a foreigner or a person who supports a family of four.
– This move did a great thing because it is a good kind of stimulation of youth employment. This is something that gives a hint that in the future, and in other areas of the economy, the help of the state or some different taxation could be expected. The help so far has not been too selective, but the just announced tax reliefs for these categories of young people are, for a start, a good type of selection – Atanackovic thinks.
He also welcomes the measure that refers to young people who start a business and enter the labor market for the first time, and according to which they will be exempt from paying duties in the amount of 70 percent on salaries. That, Atanackovic adds, will in some way affect the interest of employers.
– This measure will be useful in two ways: either the new employees will be cheaper for the company because the employer will be stimulated to hire such a worker or they will give him a higher salary – he points out.
The annual tax is paid by citizens who, by the way, have incomes higher than three average Serbian salaries. The limit over which the income for this tax must be reported this year for last year is set at 25.3 thousand euros. In 2019, about 27,000 such applications were submitted, in 2018 about 25,000, and in 2017 – about 23,000 applications.
– If we compare the number of these applications with the number of citizens, then we are talking about the fact that from 0.3 to 0.4 percent of citizens pay the annual income tax. Therefore, any relief that the state will give will actually be given to a very small number of citizens, because among those 0.4 percent, only a small part is made up of those under 40 – explains George Pap, a tax expert.
However, he believes that the Tax Administration has the structure of those who filed applications for the payment of the annual income tax last year, as well as that the state knows why it targets young people with such measures.
The fact is that a lot of young people from the IT sector, after last year’s government measures, got a job again and established a regular employment in IT companies. That is why I am sure that last year there were significantly more young people and taxpayers of this tax in general, which is probably why such tax reliefs are now being introduced for that category of the population. There are no official data for 2020 yet, he reveals.
However, Pap is not quite sure whether young people will decide to stay in the country due to the announced reliefs and thus the direct increase in salaries.
– No one can deny that it is impossible, that it cannot influence in a positive sense, but the question arises as to how many people we are talking about and whether only such measures can influence them not to leave Serbia – believes George Pap.
Another measure related to young people is a three-year reduction in the payment of taxes and contributions of 70 percent on salaries for employees entering the labor market for the first time. Such a similar privilege existed in previous years, but this time the conditions under which young people will be able to use it remain unclear.
– The question is under what conditions they will be able to get it, whether only in the case of unemployment that lasted six months or something else will be a condition. For now, it is clear that it will be valid only if employers do not reduce the number of workers – adds Pap, Politika reports.