Complexity of fiscal policy in Kosovo and their treatment

• Author: Gani Asllani
• Position: University of Peja 'Haxhi Zeka'
• Pages: 168-172

ISSN 2410-3918 Academic Journal of Business, Administration, Law and Social Sciences Vol 1 No 2

Acces online at www.iipccl.org IIPCCL Publishing, Tirana-Albania July 2015

168

Complexity of scal policy in Kosovo and their treatment

Dr. Gani Asllani

University of Peja “Haxhi Zeka”

Abstract

Fiscal policy and monetary policy are two key instruments of economic policy of a

country which are used to achieve macroeconomic goals. In Kosovo and in the new and

consolidating countries the scal policy plays the primary role in the functioning of the state,

its institutions and e conomic growth in general. In the study paper treated some of the most

sensitive issues aecting scal and tax policies, theoretical approaches, modern trends of scal

policy and addressed some of the reforms in neighboring countries. Special emphases is given

scal policies applied in Kosovo, its reforms, actions to be taken on the occasion of the policy-

making reforms and nally are given appropriate recommendations.

Keywords: Fiscal policy, scal reform, public revenues, government expenditures.

e theoretical aspect of scal policy

Economic development of one country and its function cannot be imagined and become

reality without consistent and authentic scal policies and taxation systems which provide

the same development path. e state and its institutions will not be able to exist and

function without payment of tax obligations by citizens as well as enterprises, so the tax

is part and parcel of the existence of the state and the payment of taxes is mandatory (M.

Dubrowski & T. Magdalena, Tax Reforms in Transition Economies, 2001, 6-7). In this

direction, scal policies set two fundamental questions and they consist in that:

a) It should be tax limit and what concrete scal instruments should be which do not

harm business activity and economic development in general?

b) As will be government spending on the functioning of state institutions and public

administration in general?

e answer to the rst question in theory seems to be simple: the need of the public

goods that the state performs determines the amount of the requested budget. However,

it is more contradictory than is the size of government and the functions it performs.

So, the level of taxation in the state depends on the volume of public expenditure, and

productive expenditure improve growth rate, while increasing taxes results in poor

economic performance (Institute for Development Research, Riinvest, 2005, 16). Trying

to give an answer to these questions it is useful to focus on the principles of “optimal tax”,

under which:

(1) Tax system should be neutral as much possible;

(2) It should provide more stable and optimal nancing of public expenditure;

(3) Should provide taxpayers can withstand load as;