Multi-level fiscal system in Bosnia and Herzegovina: evolution and coping with economic crisis

Dinka Antic
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Dinka Antic: Governing Board of the Indirect Taxation Authority of Bosnia and Herzegovina, Macroeconomic Analysis Unit, Banjaluka, Bosnia and Herzegovina

Financial Theory and Practice, 2013, vol. 37, issue 3, 279-310

Abstract: Fiscal federalism in Bosnia and Herzegovina is characterized by multi-level asymmetric architecture of government sector and a high degree of fiscal decentralization. Reform of indirect taxation has resulted in centralization of the major part of the revenues in B&H and induced a high degree of fiscal interdependence of governments. In the absence of national economic and fiscal goals and fiscal coordination required during the global economic crisis, strong autonomous activities of the Entities and District have been expressed. Uncoordinated and divergent responses to the crisis in addition to distorting the achieved degree of tax harmonization within B&H has led to a widening fiscal deficit and the rapid growth of borrowing at all levels of government. The aim of this paper is to propose a new model of fiscal coordination in B&H that would mitigate the negative effects of fiscal decentralization on macroeconomic management. The key hypothesis is that, in given political constraints, only a concept of fiscal federalism that includes comprehensive, institutionalized and obligatory fiscal coordination can ensure a coherent response to the crisis.

JEL-codes: H7 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ipf:finteo:v:37:y:2013:i:3:p:279-310

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