The mechanism of personal income taxation and its prospects in Ukraine

2021 ◽  
Vol 92 (1) ◽  
pp. 33-42
Author(s):  
Yaroslav Yarema
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Income Taxation ◽  
Tax Rates ◽  
Personal Income Tax ◽  
State Budget ◽  
Low Incomes ◽  
The Impact ◽  
Personal Income Taxation ◽  
Current Mechanism

The article analyses the current mechanism of personal income taxation in Ukraine, examining the impact of its individual elements on total revenues from personal income tax. The analysis of revenue contributions from personal income taxation to the consolidated state budget and local budgets indicates that the personal income tax remains the most important sources of revenue. In the structure of personal income tax revenues, wages are the main source of taxable income. The author analyses the mechanism of taxation for natural persons (businessmen) and tax receipts flowing to local budgets from incomes from business activity and highlights its shortcomings. In this context, he proposes introducing progressive tax rates, which will make it possible to shift the tax burden from individuals with low incomes to those who earn higher incomes.

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 Personal Income Taxation Determinants in Federation of Bosnia and Herzegovina

2019 ◽  
Vol 10 (1) ◽  
pp. 153-163
Author(s):  
Irena Palić ◽  
Sabina Hodžić ◽  
Ksenija Dumičić
Keyword(s):  
Labor Market ◽  
Income Inequality ◽  
Error Correction ◽  
Bosnia And Herzegovina ◽  
Income Tax ◽  
Personal Income ◽  
Income Taxation ◽  
Personal Income Tax ◽  
The Impact ◽  
Personal Income Taxation

Abstract Background: In recent years’ income inequality has been an economic issue. The primary instrument for redistributing income is personal income tax. However, based on economic theory income inequality concerns indicators such as wages, transfer payments, taxes, social security contributions, and geographical mobility. Objectives: The objective of this paper is to examine the impact of certain labor market indicators on personal income taxation in Federation of Bosnia and Herzegovina (FB&H). Methods/Approach: Since personal income taxation consists of a very broad definition and for the purpose of this research only, income from dependent (employment) activity is observed. The econometric analysis is conducted using error correction modeling, as well as forecast errors variance decomposition. Results: The error correction model is estimated, and the cointegrating equation indicates that monthly wage and number of employees statistically significantly positively affect personal income taxes in FB&H in the long-run. After two years, the selected labor market indicators explain a considerable part of forecasting error variance of personal income tax revenues. Conclusions: The implementation of reforms in the labor market and tax policies of the FB&H is suggested. In order to achieve necessary reforms, efficient governance and general stable political environment are required.

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.

scholarly journals FISCAL AND SOCIAL DETERMINANTS OF PERSONAL INCOME TAXATION

2021 ◽  
pp. 163-173
Author(s):  
Volodymyr UHRYN
Keyword(s):  
Income Tax ◽  
State Regulation ◽  
Personal Income ◽  
Income Taxation ◽  
Future Research ◽  
Social Aspect ◽  
Personal Income Tax ◽  
State Budgets ◽  
Fiscal Efficiency ◽  
Personal Income Taxation

Introduction. Direct taxes are an important financial regulator of socio-economic processes, they are one of the most important sources of budgeting and an essential tool of state regulation. The personal income tax is the main tax through which social policy is implemented in the developed countries of the world. The advantages of this tax include its social justice and fiscal efficiency, as it is able to make the level of taxation directly dependent on the amount of income of taxpayers. In addition, progressive tax rates and benefits can reduce the tax burden on the poor and increase it on high-income earners. The purpose of the article is to considerate the theoretical and practical aspects of administration of the personal income tax in the conditions of reforming of fiscal policy of Ukraine, systematization of directions of improvement of collecting of the personal income tax to local and state budgets. Methods. Methods of dialectical analysis and synthesis, deduction, induction logical generalization, comparison and formalization are used in the article. Results. The article is devoted to the study of the essence and role of personal income tax administration. Peculiarities of citizens’ income formation as an object of taxation are considered. Monitoring and analysis of indicators of personal income tax to local and state budgets was carried out. The growth rates of nominal revenues of personal income tax and military duty, real and nominal wages are studied. It was found that the main factors reducing the level of fiscal efficiency of personal income tax in Ukraine are the shadowing of incomes and the outflow of labor, including skilled personnel. Ukraine’s tax policy for the last five years is fiscally oriented and does not take into account the social aspect of personal income taxation. As a result of the research, the directions of increasing the efficiency of personal income taxation in Ukraine based on foreign experience are systematized. Prospects. The current model of personal income tax does not sufficiently perform a socioeconomic function, does not provide a socially equitable distribution of income between different segments of the population. In recent years, the fiscal significance of the personal income tax has remained, but the system of personal income taxation requires the application of progressive rates. Therefore, promising areas of future research should be the development and improvement of the mechanism of personal income taxation in the context of ensuring their socio-economic interests.

The impact of personal income tax rates on the employment decisions of small businesses

2018 ◽  
Vol 7 (1) ◽  
pp. 74-104
Author(s):  
Kathleen Grace
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Income Tax ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Employment Decisions ◽  
Wage Bill ◽  
Content Type ◽  
The Impact

Purpose Small businesses file taxes in accordance with the personal income tax code because they are considered flow-through entities. Thus, personal income tax reforms directly affect the incentives small business owners face regarding employment and operations. The paper aims to discuss these issues. Design/methodology/approach The authors use the changes in personal income tax rates during the 1993 and 2001-2003 reforms and micro-level data to estimate the effect of statutory tax rate changes on small business employment decisions. Findings The authors add two contributions to the current literature: first, the author allow for intertemporal tax planning and second, the author allow the firm’s decision to employ labor to be correlated with the firm’s wage bill decision. Estimation of a Heckman selection model for wage bills shows that the probability that a business will employ labor is 1.18 percent higher when current tax rates increase by one percentage point and 0.70 percent lower when future rates are expected to increase by one percentage point. Among firms that already employ labor, the median wage bill elasticity with respect to current tax rates is −0.64. These estimates are larger than those reported in previous research because my model includes future taxes and allows for correlation between the firm’s employment and wage bill decisions. Omitting the intertemporal tax responses biases the estimates of previous researchers upwards, whereas assuming the two firm decisions are independent biases estimates towards zero. Originality/value This paper has been cited in publications published in Journal of Entrepreneurship and Public Policy.

scholarly journals Potential and Possible Ways of Harmonizing the Personal Income Taxation Process

2018 ◽  
Vol 21 (3) ◽  
pp. 109-130
Author(s):  
Tomasz Wołowiec
Keyword(s):  
Income Tax ◽  
18Th Century ◽  
Personal Income ◽  
Point Of View ◽  
Income Taxation ◽  
Personal Income Tax ◽  
Cultural Economic ◽  
Tax Systems ◽  
Universal Structure ◽  
Personal Income Taxation

Personal income tax (hereinafter referred to as PIT) has a short history, as it appeared in tax systems of EU countries as late as at the end of the 18th century. As a specific universal structure it performs two economic functions: providing financial means for covering some public expenses (fiscal function), leveling inequalities – through its structure – in population incomes (a redistribution function). It also implements social functions of taxation through various tax reliefs and exemptions or the structure of the tax scale. Contemporary personal income tax in European countries has been shaped by many years of evolution. This proces is continuing, taking into account the process of European integration and the processes of standardizing and harmonizing tax systems in European Union countries. Most EU states only sporadically implement major reforms of personal income taxation. The scope of such changes is usually limited and determined by current fiscal needs or the need to stimulate a particular behavior of taxpayers. The current taxation of personal incomes is a very complex phenomenon which should be analyzed not only from the legal point of view, but also taking into account its social, cultural, economic and political system aspects.

scholarly journals Does A Progressive PIT Stabilize The Economy? A Comparison Of Progressive And Flat Taxes

2017 ◽  
Vol 20 (1) ◽  
pp. 21-34 ◽  
Author(s):  
Piotr Krajewski ◽  
Katarzyna Piłat
Keyword(s):  
Fiscal Policy ◽  
Income Tax ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Tax Progressivity ◽  
Output Elasticity ◽  
Automatic Stabilizer ◽  
The Impact ◽  
Automatic Stabilizers

The aim of the article is to examine the impact of progressive personal income tax rates and the effectiveness of this tax as an automatic economic stabilizer. The assessment of automatic stabilizers is based on the estimates of tax cyclical components. The study shows that the output elasticity of PIT is higher than one, which means that the analysed tax acts relatively efficiently as an automatic stabilizer. However, it was also observed that the tax progressivity is not the main reason of the effectiveness of a progressive PIT as an automatic stabilizer. The study shows that changes in progressive rates of PIT, contrary to widespread opinions, have little effect on the effectiveness of passive fiscal policy. Personal income tax acts as automatic stabilizer mostly due not to the progressive tax rates, but because of the sensitivity of employment to GDP fluctuations.

scholarly journals STATE AND PERSPECTIVES OF PERSONAL INCOME TAXATION

2019 ◽  
Vol 2 (42) ◽  
pp. 19-34
Author(s):  
Dmitro Dema ◽  
Iryna Shevchuk
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Income Taxation ◽  
Regulatory Function ◽  
Tax Burden ◽  
Personal Income Tax ◽  
Individual Income ◽  
Individual Income Tax ◽  
The Individual ◽  
Personal Income Taxation

The article deals with the directions of development and elements of the personal income taxation mechanism. The role of the tax in the regulation of incomes of the population is determined and the state of use of its regulatory capabilities in the modern system of taxation is assessed. The peculiarities of the tax burden assessment are determined and the inconsistencies of the proportional system of the social justice principle are emphasized. The necessity of strengthening the tax regulatory function using the tax burden transfer to the prosperous strata of the population by the progressive taxation tools is substantiated. The necessity of the preferential policy improvement is emphasized by introducing a non-taxable minimum of citizens' income and revision of existing privileges on personal income tax. The foreign experience and trends of individual income tax in foreign countries are considered and summarized. The dynamics of the individual income tax receipt to the consolidated budget of Ukraine is analyzed taking into account its fiscal sense. The factors of increasing fiscal efficiency are considered and the influence of changes in the interbudgetary distribution of the tax on local budget revenues is estimated. The directions of the personal income tax reformation on the basis of improvement of certain elements of the taxation mechanism are proposed.

On the Issue of Progressive or Proportional Taxation of Personal Incomes

2018 ◽  
Vol 11 (3) ◽  
pp. 114-120
Author(s):  
D. G. Chernik
Keyword(s):  
Income Tax ◽  
Personal Income ◽  
Personal Income Tax ◽  
The Social ◽  
Social And Economic Development ◽  
The Subject ◽  
Discrete Measures ◽  
Personal Income Taxation ◽  
Personal Taxation ◽  
Personal Incomes

The subject of the research is the procedure for personal income taxation. The purpose of the workwas to determine which personal taxation regime is more justified: progressive or proportional. The paperprovides the reasons for the transition from the progressive to the proportional tax. The risks and possibilities of transition to the progressive scale are analyzed. It is concluded that in order to achieve social justice and improve the welfare of the majority of peoplerather thana very small part of them, it is necessary to adopt a set of economic, fiscal and administrative measures aimed at solving a single task — ensuring the social and economic development of Russia. Discrete measures, such as the introduction of the progressive personal income tax will not lead to desired results. Moreover, the progressive tax cannot be introduced unlessit is ruled by law that large spendings of citizens must correspond to their incomes.

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