Fiscal Federalism in Bosnia and Herzegovina: Ten Years after the Dayton Treatment and Still not in a Steady Condition

Jan Werner (), Laurent Guihéry and Ognjen Djukic

No 01-2006, Working Papers from Institute of Local Public Finance

Abstract: The following paper deals with the fiscal federalism in Bosnia and Herzegovina (BiH). Besides a detailed description of the development of the fiscal federalism in BiH since the Dayton peace process, the main focus of this paper is to illustrate how the public finance system in BiH is designed and what the main differences between the Republika Srpska and the BiH Federation are. We analyse the revenue disparities between the cantons and their respective municipalities, which are boosted by the origin or rather the derivation principle in tax collection, and present an equalisation system based on the VAT, which can minimise the fiscal gaps mainly in the Federation of Bosnia and Herzegovina (FBiH). Moreover, this paper highlights the successful process and the unsolved problems of the recently introduced Value Added Tax in BiH. Especially the VAT introduction, the common Governance Board, the Indirect Tax Administration (ITA) and the newly formed common army and police force could be interpreted as signs of stabilisation for this fragmented federation. Although these are milestones of a peaceful coexistence between Moslem Bosniacs, Orthodox Serbs and Catholic Croats, the Bosnian fiscal federalism has only been partly achieved.

Keywords: Fiscal Federalism; Grants; VAT introduction; Bosnia and Herzegovina (search for similar items in EconPapers)
JEL-codes: H1 H2 H7 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2006-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Fiscal Federalism in Bosnia and Herzegovina: Ten Years after the Dayton Treatment and Still not in a Steady Condition (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:lpf:wpaper:01-2006

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