Justification of tax regulation tools to support the poor

  • Received September 3, 2019;
    Accepted September 20, 2019;
    Published January 15, 2020
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/ed.18(3).2019.05
  • Article Info
    Volume 18 2019, Issue #3, pp. 45-57
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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.

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    • Figure 1. Питома вага населення країн ЄС, яке потрапило під ризик бідності або соціальної ізоляції (за даними 2018 року)
    • Figure 2. Малозабезпечені верстви населення в Україні
    • Table 1. Етапи боротьби з бідністю в ЄС
    • Table 2. Неоподатковуваний мінімум для громадян в країнах ЄС (річне вимірювання)
    • Table 3. Особливості індивідуального прибуткового оподаткування в країнах ЄС
    • Table 4. Результат моделювання ставок податку на доходи фізичних осіб
    • Table 5. Інструменти податкового регулювання малозабезпечених верств населення в Україні