Personal income tax as a tool for implementing state social policy
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Author(s)Liliia BarannykLink to ORCID Index: https://orcid.org/0000-0001-9469-643X
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Olena DobrovolskaLink to ORCID Index: https://orcid.org/0000-0002-4159-8446
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Victoriia TaranenkoLink to ORCID Index: https://orcid.org/0000-0002-1326-7586
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Tetyana KoriahinаLink to ORCID Index: https://orcid.org/0000-0002-6756-2484
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Ludmyla RybalchenkoLink to ORCID Index: https://orcid.org/0000-0003-0413-8296
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DOIhttp://dx.doi.org/10.21511/imfi.18(2).2021.23
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Article InfoVolume 18 2021, Issue #2, pp. 287-297
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Personal income tax (PIT) is one of the most important taxes in Ukraine due to its economic, social and political role. With its help, one can regulate the investment process, the level of real incomes and maintain stability in society. However, the potential of this tax in Ukraine is not fully used. The purpose of the study is to identify the main problems of PIT and further directions of its implementation as an instrument of social policy. Laffer’s tax theory, on the dependence of economic efficiency of taxation on lower tax rates and the degree of progressiveness of taxes, was taken as a conceptual line of research. Consideration of world trends in the practice of PIT allowed tracing its evolution and choose the methods of its optimization that are acceptable for Ukraine. The use of comparative and statistical analyses, grouping, structural modeling method, index method and systematization of results allowed formulating the author’s version of the income taxation reform in Ukraine. The introduction of a progressive taxation scale should take into account the quality of tax administration, the availability of tax benefits, deductions and loans, the amount of fines, and public perception of the tax system in addition to quantitative results. The proposed family taxation, based on the differentiation of taxpayers by their marital status, actual solvency through the introduction of family rates and the establishment of progressive rates of personal income tax, will fully implement the principle of social justice in the distribution of income.
- Keywords
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JEL Classification (Paper profile tab)Н20, Н21, Н24
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References50
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Tables5
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Figures0
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- Table 2. The proposed scale of personal income taxation in Ukraine
- Table 3. Calculation of the tax base and PIT according to the proposed PIT scale
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Justification of tax regulation tools to support the poor
Oleksii Naidenko
doi: http://dx.doi.org/10.21511/ed.18(3).2019.05
The system of taxation of personal income in Ukraine does not allow fully implementing the principle of social justice, which is regulated by the Tax Code of Ukraine. This is because in many cases, the taxpayers’ solvency is not taken into account when setting tax rates. The Ukrainian legislation does not regulate the list of poor people, and there is no clear compensatory mechanism of assistance to these social groups. As a result, the number of poor people is growing and, therefore, the social tension is increasing in Ukraine. The article focuses on the poor performance of Ukraine in various indices of socio-economic development, which results in the growth of poor people. There was no clear legislation to classify the poor in Ukraine. A list of poor people is offered. The main directions of poverty reduction in European countries are analyzed. Attention is drawn to the poor status of poverty reduction in Ukraine through tax policies, due to the poor implementation of the Poverty Reduction Strategy by the executive authorities. The instruments of tax regulation of low-income population in EU countries are considered, the main ones being tax rebate (tax credit), tax exemption, non-taxable minimum, and reduced tax rate. The list of instruments for tax regulation of low-income population in EU countries and Ukraine is summarized. The progressive scale of taxation of personal income is substantiated. The list of poor people is generalized. A non-taxable minimum income indicator is proposed based on the indicator used to determine the limit for applying the tax social benefit. Given the experience of EU countries, the introduction of separate instruments for tax regulation of low-income groups in Ukraine is justified.
