Member of the Fiscal Council Vladimir Vuckovic has said that Serbia needs a comprehensive tax reform which should not be reduced just to raising the value added tax (VAT).

"We must not reduce the public sector reform and tax reform to raising the VAT rate. This will, in all likelihood, be one of the steps the next government will have to consider and undertake. But this step would not be justified and accepted by the public in the right way if the whole story boiled down to this," Vuckovic told Tanjug.

He said the state needs to offer clear proof it has done everything in its power to cut public spending.
"The government needs to save in every possible way. This includes some unpopular moves from the point of view of the public sector - probably eliminating some unneeded institutions, reviewing employment in different state sectors, reform of education, health care, the pension system... All these steps should yield longterm effects," Vuckovic said.

"On the other hand, in order to give a certain incentive to the economy and allow it to breathe more easily despite the VAT increase, we need to consider lowering the burden on work. Thus, on the one side, the economy would be indirectly more burdened through the VAT increase, but it would be given more room to discrease the burden on production inputs, above all work," he added.

According to Vuckovic, the government should also consider raising property tax, i.e. passing a package of well designed measures, so that the public would acknowledge the fact that some unpopular moves have to be made and eventually be able to accept some painful measures.