Higher VAT – the prelude to a new round of impoverishment of citizens


With new austerity measures for next year, the Government directly targets the most vulnerable population groups and is trying to once again transfer the burden of its catastrophic economic decisions solely and exclusively to the citizens of Montenegro. We fear that the announced increase of VAT to 21 percent is just one of a series of measures which will further impoverish citizens in the coming year.

Previously, the VAT increase to the current 19 percent followed after the activation of the KAP guarantees and after taking a very unfavorable loan for highway. MANS warned that the Government of Montenegro had begun with the introduction of a whole series of new taxes for citizens in order to maintain some sort of economic stability. After illegal taxes on electricity and fuel and crisis tax, it is now time for the new VAT increase, to 21%, and a new excise tax on cigarettes, alcohol and coal.

It does not take an economic expert to conclude what the impact of these measures will be to the already impoverished citizens’ budgets, despite the government’s promises that it will not increase the rate of VAT on basic foodstuffs. Explanation of the Minister of Finance, who says that this protects the most vulnerable part of the population, is hypocritical and hides the intention of the government to reduce this part of the population to a mere biological survival and keep those people in extreme poverty. In reality, the citizens can expect an increase in prices of other foodstuffs, fuel, electricity and, generally, all goods and services on which the value added tax is calculated.

On the other hand, despite the tax debt that was piled for years, and which is measured in hundreds of millions, the government puts minimum effort to collect the debt and thus fill the obvious gaps in the budget. The new austerity measures again do not include taxation of luxury that the public has been long expecting government to introduce, nor the increase of income tax.

All this shows that the government is determined to take from the citizens again, so they will once again pay the price for completely wrong economic policy that has continuously favored the so-called strategic investors and their projects of personal enrichment based on the resources of the country and to the detriment of the public interest and the state budget. Now, when the invoice for such irresponsible behavior is issued, the government sends it to the citizens to pay.

We fear that the new, increased rate of VAT will not be the last we will see of the Government of Montenegro when it comes to so-called “maintaining fiscal stability” and we can only expect new charges. MANS therefore urges the Government to openly declare what additional charges are planned in the future, and above all to tell the truth about how and to what extent this will affect the citizens’ ability to survive and feed their families.


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