Inflation and price increases of almost everything since the beginning of the year only benefit the state and entities, which will collect more money from taxes due to higher prices.
How are “Independent newspaper” previously wrote, since the beginning of this year, the price of almost everything has gone up, from network fees on electricity bills, all basic foodstuffs, to other overhead costs, rent, and an increase in the price of telecommunications services, i.e. internet and cable television, has also been announced.
A new wave of price increases follows
What can be said is that shortly after these drastic price increases, in the next few days there will be another wave of price increases for almost everything, because fuel prices are increasing day by day due to the tense relations in the Middle East.
We know that fuel prices are built into almost all products, so it is inevitable that there will be an increase in the prices of almost all goods and services.
The only benefit from this will be the state and the entities, because they will receive larger amounts of money from VAT collection.
The state charges VAT of 17 percent, and the amount paid is not the same if, for example, one loaf of bread is two KM or if it costs 2.5 KM.
ITA BiH collected more money from VAT
By the way, from month to month the Directorate for Indirect Taxation of BiH (ITA BiH) publishes data on how much money has been collected.
According to their data, revenues from indirect taxes in the first two months of 2026 amounted to one billion and 885 million KM and are higher by 84 million KM or 4.66% compared to the same period in 2025, when they amounted to one billion and 801 million KM.
“The net collected revenues that were distributed to users in the first two months of 2026, namely the state, entities and the Brčko District, amounted to one billion and 530 million KM, which is 7.11% more than in 2025,” the announcement reads.
It is added that in February 2026, slightly more than one billion KM indirect taxes were collected, which is 79 million KM more than in February 2025.
“For the financing of state institutions in the first two months of 2026, an amount of 158 million KM has been allocated. All excess collected revenues from indirect taxes ended up in entity coffers and with the Brčko District. Thus, the Federation of BiH received 834 million KM from the single ITA account, the Republika Srpska 467 million KM and the Brčko District 46 million KM”, the announcement reads.
Annual inflation 3.6 percent
Also, according to the data of the BiH Agency for Statistics, the prices of products and services used for personal consumption in BiH were 0.9 percent higher in January compared to December last year.
“The level of prices in January 2026 compared to the same month of the previous year is higher by 3.6%”, stated the BiH Statistics Agency.
And these are all data that do not include higher fuel prices.
The growth of inflation contributes to the growth of public revenues
Predrag Mlinarević, a professor at the Faculty of Economics in East Sarajevo, told “Nezavisne novine” that the growth of inflation contributes to the growth of public revenues, which at first can lead to the conclusion that it benefits the budget.
“However, with the process of inflation growth, there is a reduction in the purchasing power of wages of employees in the public sector, as well as other users of the budget. Such a development of the situation leads to pressure to increase wages and other fixed benefits from the budget, so that a kind of race opens between price growth and wage growth. To the extent that wage growth is not able to absorb the consequences of inflation, the state will have an increase in fiscal capacity. In the case of an even increase in prices and wages and other budget benefits, the real amount of public revenues will remain unchanged”, he pointed out is Mlinarevic.
