The Potential for a Property Tax in Bosnia and Herzegovina

In November 1995 the Dayton Peace Accords were signed, ending a three-and-one-half-year war in Bosnia and Herzegovina. Despite being constituted as a single country under the Accords, Bosnia and Herzegovina were divided into two largely independent Entities: the Federation of Bosnia and Herzegovina and the Republika Srpska. Since then a lot of effort and resources have been devoted to establishing a new governmental structure, with increasing responsibilities being given to sub-Entity units of governments. In turn these units of government—Cantons and municipalities in the Federation and municipalities in the Republika Srpska—are searching for ways to expand and diversify their tax bases.

This paper analyzes whether a property tax is feasible as a source of revenue for sub-Entity units of government, especially municipalities. Attention is paid to the technical and administrative steps that would be needed to develop and implement a successful property tax system in Bosnia and Herzegovina. Since major components necessary for a property tax are currently in place, the authors present a plan that outlines the steps for its implementation.