Context
Serbia is currently undertaking political and economic reforms, the goals of which are to increase the stability of the state and promote convergence with the European Union, in a market economic system. Given the precarious budgetary situation, strengthening the capacity for self-financing is a key element of Serbia's development strategy. At the same time, the Serbian Government has recognised the importance of good governance, not only with a view to possible EU accession, but also as a step in becoming a modern and effective state.
The present low level of acceptance of state institutions on the part of the population stems from a lack of confidence in the Serbian tax system, and also applies to the state budget system, whose procedures lack effectiveness and transparency.
Citizens are not sufficiently involved in political decision making, which strongly curtails their understanding and acceptance of the state’s actions. Currently, Serbia's public finance system does not fulfil the requirements for transparency, effectiveness, citizen orientation and accountability of a modern state in line with EU standards.
Objective
Transparency, effectiveness and citizen orientation have improved in the key components of public finance system.
Approach
The methods used in the project include the provision of systems advice to the main components of the public finance system. This takes into consideration the interrelationship between state income and expenditure. Advisory services provided to the Ministry of Finance and the tax administration are intended to scale up the results by introducing them across the whole system. The good financial governance approach is intended to integrate the principles of good governance – such as transparency, rule of law, effectiveness and citizen orientation – in the public finance system. This process involves all the affected stakeholders, including representatives of interest groups, citizens and companies, as well as representatives of politics and administration.
The project is building capacities in the fields of tax law and budgeting. This should enable, for instance, the staff of the Ministry of Finance to draft laws and administrative provisions competently, in line with EU standards. Meanwhile, heads of department and desk officers are developing the competences to perform strategic management tasks and implement reform initiatives. The project also supports the improvement of institutional and organisational structures within the tax administration and in the internal budgetary controlling section of the Ministry. These measures should improve the reputation of both institutions as representatives of the Serbian state.
The Ministry and the tax administration also receive advice on taxpayer education. This includes raising their awareness regarding their rights and obligations, and establishing a constructive dialogue between society, the private sector and the state. This should encourage a relationship based on accountability between citizens and the state.
Project inputs include advisory services delivered by national and international experts, and the supply of materials and equipment (basic office equipment). Financial contributions are made to fund studies, questionnaires, seminars, workshops, study tours, training courses and media campaigns.
Results achieved so far
The performance of the Serbian tax administration in exercising its core functions and in managing reform processes has improved. A modernisation plan has been developed and a department set up for the management of reforms as well as the coordination of internal and external projects.
The preconditions have been met for a management information system to underpin the effective and efficient management of the tax administration. A glossary has been created containing more than 220 everyday terms from the field of tax administration. This will provide the basis for the reporting system and the development of performance indicators.
The taxpayers’ knowledge and their awareness about their rights and duties have been enhanced (taxpayer education). An informative weekly television broadcast provides information on tax issues. Since 2012, a regular tax forum has been held involving taxpayers and representatives of the administration. This demonstrates the administration’s increased citizen-orientation.
The Ministry of Finance's budget inspection department is involved in the entire process of public finance management. An overarching strategy has been developed to strengthen the department, as has a methodology to ensure a consistent approach is taken. Reform activities for the next three years have been set out in an operational plan.