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

Author

Listed:
  • Jan Werner

    (Institute of Local Public Finance)

  • Laurent Guihéry
  • Ognjen Djukic

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.

Suggested Citation

  • Jan Werner & Laurent Guihéry & Ognjen Djukic, 2006. "Fiscal Federalism in Bosnia and Herzegovina: Ten Years after the Dayton Treatment and Still not in a Steady Condition," Working Papers 01-2006, Institute of Local Public Finance.
    • Handle: RePEc:lpf:wpaper:01-2006
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    References listed on IDEAS

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    8. Jan Werner & Anwar Shah, 2005. "Equalisation and Local Taxation in Denmark, Norway and Sweden," Working Papers 02-2005, Institute of Local Public Finance.
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    Cited by:

    1. Jan Werner, 2012. "Revenues from National Resource Taxation – both a blessing and a curse," Working Papers 03-2012, Institute of Local Public Finance.
    2. Jan Werner, 2009. "Fiscal Solidarity: Key Benefits and Pitfalls for Spain to Lower their Fiscal Conflicts," Working Papers 02-2009, Institute of Local Public Finance.
    3. Jan Werner, 2008. "Fiskaldezentralisierung - Optionen und Handlungsfelder für die künftige deutsche Entwicklungspolitik und insbesondere die Arbeit der GTZ," Working Papers 04-2008, Institute of Local Public Finance.
    4. Jan Werner & Anwar Shah, 2006. "Financing of Education: Some Experiences from ten European Countries," Working Papers 02-2006, Institute of Local Public Finance.

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    Keywords

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H1 - Public Economics - - Structure and Scope of Government

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