Flat-rate personal income tax in Lithuania, Romania and Hungary: A revolutionary policy idea without revolutionary outcomes

2021 ◽  
pp. 095892872110357
Author(s):  
Borbála Kovács
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Tax Credits ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Flat Tax ◽  
Flat Rate ◽  
Policy Ideas ◽  
Tax Regimes ◽  
Adoption And Diffusion

A decade of writing on the politics of flat-rate tax adoption and diffusion across post-socialist Europe and Asia has presented these reforms as revolutionary, but at least bold. However, in what ways they might have proven so and for whom has not been investigated. Based on a micro-level study of actual personal income tax rates for the 1991–2018 period, the article engages critically with the scope of the flat tax ‘revolution’ in three different flat tax nations, early adopter Lithuania, later-adopter Romania and recent-adopter Hungary. The analysis shows that the introduction of flat-rate tax in no way revolutionised actual tax burdens for the majority of earners, not even for high-income earners, whose tax burdens had been declining for at least a decade before the arrival of flat tax in both Romania and Hungary. The article also reveals the crucial role played by standard tax credits in shaping tax regime progressivity not only in flat tax regimes, but also progressive ones. The article suggests that the novelty of policy ideas cannot be assumed, but needs to rest on comparisons of outcomes.

scholarly journals What Explains the Redistribution Achieved by the Italian Personal Income Tax? Evidence from Administrative Data

2016 ◽  
Vol 46 (1) ◽  
pp. 7-28 ◽  
Author(s):  
Gian Paolo Barbetta ◽  
Simone Pellegrino ◽  
Gilberto Turati
Keyword(s):  
Administrative Data ◽  
Income Tax ◽  
Personal Income ◽  
Tax Credits ◽  
Tax Credit ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Tax Returns ◽  
The Government ◽  
Redistributive Effect

We analyze the Italian personal income tax (PIT) in the light of the different tools available to the government to achieve income redistribution. We focus in particular on three mechanisms: marginal tax rates, deductions, and tax credits. Exploiting an extended version of the standard Pfähler decomposition, we estimate the contribution of each of these three tools to the overall redistributive effect of the PIT using administrative data on more than 1.3 million individual tax returns. Our estimates suggest that more than half of the total PIT redistributive effect is due to the two most important tax credits (the tax credit for employment and the tax credit for retirement income), while the marginal rates schedule contribution is about 40 percent. On the contrary, most of the itemized expenditures do not show any sizable impact on redistribution.

scholarly journals Optimal progressivity of personal income tax: a general equilibrium evaluation for Spain

SERIEs ◽  
2020 ◽  
Vol 11 (4) ◽  
pp. 407-455 ◽  
Author(s):  
Darío Serrano-Puente
Keyword(s):  
General Equilibrium ◽  
Income Tax ◽  
Optimal Level ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Negative Effects ◽  
Spanish Economy ◽  
Current Scenario ◽  
The Cost

AbstractIs the Spanish economy positioned at its optimal progressivity level in personal income tax? This article quantifies the aggregate, distributional, and welfare consequences of moving toward such an optimal level. A heterogeneous households general equilibrium model featuring both life cycle and dynastic elements is calibrated to replicate some characteristics of the Spanish economy and used to evaluate potential reforms of the tax system. The findings suggest that increasing progressivity would be optimal, even though it would involve an efficiency loss. The optimal reform of the tax schedule would reduce wealth and income inequality at the cost of negative effects on capital, labor, and output. Finally, these theoretical results are evaluated using tax microdata and describe a current scenario where the income-top households typically face suboptimal effective average tax rates.

scholarly journals EUROPEAN PRIORITIES FOR PERSONAL INCOME TAXATION

2020 ◽  
pp. 77-87
Author(s):  
Fedir TKACHYK ◽  
Victoriia OSTAPCHUK
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
European Countries ◽  
Income Taxation ◽  
Social Aspects ◽  
Tax Rates ◽  
The European Union ◽  
Personal Income Tax ◽  
Important Place ◽  
Personal Income Taxation

Introduction. In the current conditions of globalization of socio-economic development and formation of a new financial civilization, social aspects of tax policy take a important place. The system of taxation of income of citizens in Ukraine today is not fully coping with the performance of their functions. The experience of developed European countries on the formation of an effective mechanism of taxation of personal income will contribute to the establishment of the newest social and fiscal-oriented paradigm of taxation of citizens in Ukraine. The increased interest in the procedures for administering the personal income tax is also explained by the fact that this tax is one of the main sources of income to the budget of Ukraine. The purpose is to determine the peculiarities of taxation of personal income tax in Ukraine, to find out the common and different features tax system in Ukraine and European countries, to systematize recommendations on improving the mechanism of taxation of personal income. Results. The international typology of personal income tax systems is given. The general features of personal income taxation and mechanisms of application of personal income tax rates in some countries of the European Union are considered. It is argued that the implementation of the European tax experience will facilitate a faster transition to a new and effective system of personal income taxation in Ukraine. To improve personal income taxation in Ukraine, it is necessary to revise personal income tax rates, increase the amount of tax-free minimum incomes, ensure the full functioning of electronic declaration of personal incomes, optimize concessional policies, increase tax literacy and tax culture. Prospects. Further research will focus on the social aspects of taxing citizens' income in terms of differentiation of tax rates, the logic of using preferences in taxing personal income, the introduction of an effective threshold of the non-taxable minimum income, promoting the right to tax rebates, etc.

scholarly journals HARMONIZATION OF TAX LEGISLATION OF THE ASEAN COMMUNITY

2017 ◽  
Vol 1 (1) ◽  
pp. 1-10
Author(s):  
TANAPONG DAMKERNGKHAJORNWONG
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Consumption Tax ◽  
Direct Taxation ◽  
Tax Legislation ◽  
Asean Member ◽  
Tax Harmonization ◽  
Asean Countries

Abstract This article indicates how tax legislations, both in direct and indirect fields, of ASEAN countries should be harmonized. With respect to direct taxation, the issue of direct tax rates harmonization - personal income tax and corporate income tax - will firstly be discussed. Further, I will look into how the personal income tax treatment on a resident exercising the free movement of skilled labour should be. In addition, how to enhance the network of tax treaties between ASEAN Member States and withholding tax levied on cross-border transaction will also be described. As regards indirect taxation, I will consider to what extent such the consumption tax systems as VAT and GST in each ASEAN countries could be in accordance with each other. Finally, what challenges over tax harmonization in ASEAN can be will be noted. The majority of the discussions above will be based upon the tax harmonization and coordination already conducted within the EU. 

scholarly journals HARMONIZATION OF TAX LEGISLATION OF THE ASEAN COMMUNITY

2017 ◽  
Vol 1 (1) ◽  
pp. 1-10
Author(s):  
TANAPONG DAMKERNGKHAJORNWONG
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Consumption Tax ◽  
Direct Taxation ◽  
Tax Legislation ◽  
Asean Member ◽  
Tax Harmonization ◽  
Asean Countries

Abstract This article indicates how tax legislations, both in direct and indirect fields, of ASEAN countries should be harmonized. With respect to direct taxation, the issue of direct tax rates harmonization - personal income tax and corporate income tax - will firstly be discussed. Further, I will look into how the personal income tax treatment on a resident exercising the free movement of skilled labour should be. In addition, how to enhance the network of tax treaties between ASEAN Member States and withholding tax levied on cross-border transaction will also be described. As regards indirect taxation, I will consider to what extent such the consumption tax systems as VAT and GST in each ASEAN countries could be in accordance with each other. Finally, what challenges over tax harmonization in ASEAN can be will be noted. The majority of the discussions above will be based upon the tax harmonization and coordination already conducted within the EU. 

scholarly journals Personal income tax reform in Latvia: assessment of effect

2019 ◽  
Author(s):  
Larisa Bule ◽  
Līga Leitāne ◽  
Kristīne Rozīte
Keyword(s):  
Income Tax ◽  
Social Insurance ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
State Revenue ◽  
Normative Concepts ◽  
The Impact ◽  
Practical Implications ◽  
Income Tax Reform

Personal income tax (PIT) policy in Latvia has been changed significantly in 2018 with the aim to reduce the tax burden and increase the income of working population by amending progressive tax rates and increasing the non-taxable minimum and minimum wage. Purpose − the aim of this study is to estimate the impact of PIT reform by assessing the effect of implementation of non-taxable minimum, deductions and substantiated spending on the dynamics of income and tax administration efficiency. Research methodology − PIT theoretic and normative concepts have been analyzed; unpublished data on actual wages in 2015−2018 provided by Latvian State Revenue Service and State Social Insurance Agency have been estimated. Findings − the main conclusion of this study is that the aim of the reform has not been achieved: income inequality hasn’t been reduced, an increase of income has been irrelevant, the gains from the reform have become unobtainable for the most unprotected groups because of the insufficient level of income. The implementation of the differentiated non-taxable minimum has generated PIT debts and higher administrative burden. Practical implications − the study may be implemented in case of progressive PIT for the reassessment of the tax framework and its future development. Originality/Value − this study is original, the actual effect of PIT reform in Latvia previously hasn’t been analyzed.

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