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PM Marković at PMQs: Tax burden on labour in Montenegro is at level of EU average, Government create conditions to increase living standard of citizens

PM Marković at PMQs: Tax burden on labour in Montenegro is at level of EU average, Government create conditions to increase living standard of citizens
Published date: 24.06.2020 15:45 | Author: PR Service

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Podgorica, Montenegro (24 June 2020) -- Prime Minister Duško Marković said during the Prime Minister's Questions that the tax burden on labour in Montenegro is at the level of the European average and has been reduced by over 60% of gross earnings of employees, as it was in the 1990s, and by about 50% in the years when euro was introduced, to about 40% as we have today. 

"The Government is dedicated to creating conditions for improving the living standards of all citizens, especially those with the lowest incomes, which is evidenced by the decision that increased the minimum wage by 15% in 2019. At the same time, the rate of health insurance contributions at the expense of the employer was reduced by 2 percentage points from July last year, in order not to slow down the growth of employment and competitiveness of the economy, i.e. to reduce the overall tax burden on labour. Both changes took place simultaneously, on 1 July 2019. Also, the higher personal income tax rate was reduced from 11% to 9%, from 1 January this year, which further reduces the overall tax burden on labour and creates the possibility of further increase in wages. So, even in the time of fiscal consolidation that we have been implementing since the beginning of 2017, the Government not only did not increase, but also reduced the tax burden on labour. Certainly, we are aware of the fact that in order to strengthen the competitiveness of the economy and further increase the salaries of Montenegrin citizens, it is necessary to work further to reduce the tax burden on labour, which is certainly part of our economic policy," said the Prime Minister answering the questions from the Caucus Club of Social Democratic Party and the Liberal Party.

"The current economic situation caused by the SARS-CoV-19 virus and the measures we have adopted, according to current estimates, will result in a reduction in budget revenues by about EUR 350 million compared to the plan for 2020, which requires seeking a model for additional funding. I especially emphasize that we are registering lower revenues by about EUR 12 million, due to the reduction of the rate of contributions to health insurance, which has been in force for a year, for the first half of the current year. This decline was partly caused by a decline in economic activity due to the coronavirus pandemic, but it is largely the result of lower rates of health insurance contributions, which can be seen in the collection of PIO and unemployment contributions, which increased slightly compared to the same period last year. Despite all the above, you know that even during the severe crisis caused by the epidemic, with special sensibility, we acted concretely and in a timely manner, to preserve employment. We paid a gross amount of EUR 32.5 million, during April and May this year, to subsidize salaries for 65 thousand employees. We have already approved salary subsidies for 250 new employees for a period of 6 months. The total amount of deferred personal income taxes, contributions and liabilities arising from the reprogramming of tax claims, by mid – June, amounts to over EUR 45 million," said Prime Minister Duško Marković.

For full press release in Montenegrin, please click here.