Country Listing

Yugoslavia Table of Contents


Government Revenue and Spending

Most federal revenue was collected in the form of turnover taxes and assessments by local and federal self-management communities of interest, which had financial management responsibility for social services such as education, health, and pensions. Because a large portion of the national budget was committed to social services, levies by the communities of interest were an important part of the tax structure. The republics and provinces and the communes also levied taxes; their main revenue sources were the same as those of the federal government, but they also taxed income and personal property. The last two categories provided little income, because the minimum income level on which income tax was collected was very high. Personal property taxes were collected mostly on private homes (see Housing , ch. 2). Peasants and private businesses were taxed on assessed incomes, often at very high rates that discouraged individual economic initiative. Constitutional reform aimed at restructuring the tax system to eliminate such restrictions.

In 1987 the government purchased 41 percent of Yugoslavia's social product (see Glossary) through large expenditures on defense, government administration, and social services (see table 11, Appendix). Social services received an unusually large allotment for a country of Yugoslavia's modest resources. Defense took about 46 percent of federal outlays budgeted for 1990, because of Yugoslavia's policy of maintaining security and integrity as a nonaligned state (see Threat Perception; Military Budget , ch. 5). Other major federal expenditure categories were education and aid to underdeveloped regions.

The 1974 Constitution virtually eliminated direct federal expenditures on investment. Partly for this reason, in 1990 the federal government accounted for only one-quarter of total government spending in Yugoslavia. The remainder was disbursed by authorities at the republic or commune level.

Data as of December 1990