President Jakov Milatović has questioned why the Montenegrin government is opting to reduce pension contributions instead of lowering VAT. In his latest query, Milatović expressed frustration over the lack of public debate regarding the ‘Europe Now 2’ program and the government’s decision-making process.
Milatović pointed out that the government proposed a 6% increase in average net salaries by cutting pension contributions. However, he criticized this approach for being implemented without public discussion, broader consultations, or the agreement of social partners, which he believes undermines the pension system’s foundation of intergenerational solidarity.
The President also highlighted concerns about how the government plans to cover the deficit created by the contribution cuts. He noted that the government intends to offset this shortfall by raising VAT and other taxes on sectors like tourism, wine, online shopping, and culture, contributing further to the already significant rise in prices. Milatović emphasized that the increase in prices has negated the anticipated salary increases, creating risks and challenges for the pension system.
Milatović proposed that instead of redistributing pension contributions, the government should reduce VAT. He argued that lower taxes or contributions would stimulate economic activity and demand, offering more benefits than the pension contribution reduction. According to Milatović, reducing VAT would lower prices across the board, boosting the purchasing power of all citizens, including employees, pensioners, students, and the unemployed.
Additionally, he suggested that a VAT reduction could enhance the competitiveness of the economy and drive economic growth. Milatović called for a more transparent and inclusive approach to economic policy-making, advocating for public discussions rather than swift and opaque decisions.
