Today, the governments of the western Balkan countries are confronted with huge financing problems due to very low employment rates, high levels of undeclared work, low financial discipline and a lack of equity and efficiency in tax matters. The consequence is that these governments depend, to a certain degree, on the support of the European and international financial institutions to fix their budgets. Such a situation is unsustainable in the long run. The main aim of this article, which is drawn from a substantial comparative report into the issue, is to examine budgetary and taxation policies in individual European countries, with a special focus on the western Balkans in the context of its road to EU membership, from the viewpoint of equity, efficiency and sustainability. We examine how good governance in tax matters and the fight against tax fraud and tax evasion can help to raise domestic revenue, while we also highlight the responses of trade unions in the region as regards tax reforms particularly with regard to workers and the labour market.
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