The mayor of Belgrade, Aleksandar Šapić, announced that public transportation in the city will become completely free starting January 1, 2025. However, experts have expressed concerns that this “free” service will actually be funded through higher taxes or subsidies, impacting taxpayers in other sectors. They also warn that the decision could have unintended consequences, particularly for vulnerable groups who were previously exempt from paying.
Economist Milan R. Kovačević explained to New Economy that the concept of “free” transportation is not feasible. He argued that if fare collection is eliminated, the necessary funding must come from taxes or national subsidies. Kovačević suggested that a better approach would have been to improve the organization of public transport rather than offering an unsustainable free system. He further warned that the new system could lead to higher costs for citizens, as more people, including those who previously didn’t rely on city transport, may start using it.
Nikola Jovanović, director of the Center for Local Self-Government (CLS), agreed, pointing out that the vulnerable groups—such as students, pensioners, and people with disabilities—who were already exempt from paying, will no longer enjoy this benefit. He criticized the decision as rushed, arguing that it may not benefit anyone, except employers who will no longer have to reimburse transportation costs.
Šapić proudly announced that Belgrade will become the first European city with over half a million inhabitants to offer free public transport. However, cities like Oslo (709,037 residents) already provide completely free public transport, and many larger European cities offer it for children, students, and pensioners. Luxembourg has a nationwide free transport system, though most European cities still charge for services.
Jovanović questioned why no large European city has fully implemented free public transport, suggesting that there are valid reasons for this. He emphasized that the ticketing system not only generates revenue but also helps the city collect valuable data to optimize transport services.
Who will benefit from the decision?
Kovačević believes that the main beneficiaries of the decision will be employers, who will no longer need to compensate employees for transportation costs. However, he argued that workers who previously walked or didn’t travel every day will end up losing out. The broader issue, though, lies in the long-term impact on Belgrade’s public transport system.
According to the latest data for 2023, the public utility company “Naplata prevozne usluge Belgrade,” which oversees ticket collection, employs 111 workers, mostly controllers, and generates about 950 million dinars annually. Kovačević pointed out that these employees may lose their jobs as the ticketing system is abolished. Jovanović echoed this concern, noting that the city had previously invested significant funds in creating a new ticketing system and the “Naplata” company, which may now become obsolete.
A hasty decision?
Both experts argued that such decisions should not be made by a single person but rather through a team of experts who could evaluate all aspects of the transport system. Kovačević criticized Šapić for making a unilateral decision without proper long-term planning or expert analysis.
Jovanović highlighted that just months before the announcement, the city had employed ten additional people in “Naplata” during a budget rebalancing, which he believes demonstrates that the decision was not planned carefully.
The mayor’s decision is seen by some as a populist move aimed at appeasing public opinion amidst societal tensions. According to the State Audit Institution (SAI), public transport revenues from May 25 to December 31, 2023, amounted to 1.9 billion dinars, but these figures were lower than in previous years. SAI also flagged the city’s practice of classifying transport funds as income in the budget, a practice they deem non-compliant with the Budget System Law.
With free public transport set to begin in 2025, the city will need to find a sustainable way to fund these services, which will likely include changes in how the funds are allocated for employee salaries, bus maintenance, and other operational costs. The future of Belgrade’s public transport system remains uncertain, and the impact of this bold decision will likely unfold over time.
