Personal Income Tax Changes Research Articles

Wpływ kryzysu finansowego na dochody gmin miejskich w Polsce – doświadczenia pandemii COVID-19

The COVID-19 pandemic has given rise to grave economic consequences, especially for the public finance sector, both at the central and local government level. The aftermath of the pandemic-induced crisis began to be felt particularly by local government units (LGUs), which are responsible for the implementation of most public tasks at local level. As a consequence, the role of budget planning increases and the rationalization of public expenditure in response to declining revenues becomes important. This paper is in line with the ongoing discussion on the implications of the COVID-19-induced crisis. Two research goals were formulated. The former was to assess the effects of the crisis caused by the COVID-19 pandemic on budget revenues and indirectly on the financial standing of Polish urban municipalities, and the latter was to identify changes in the structure of urban municipalities budgets in Poland as a consequence of the pandemic. For the needs of the study, we used an indicator analysis of urban municipalities budgets, which allows for a synthetic determination of the financial condition and verification of development decisions. The aim of the research was achieved by analyzing the dynamics of indicators that characterize urban municipalities budget revenue in Poland. The scope of research covered the years 2010–2022. The results and the formulated practical recommendations constitute a complementation of the research on the effects of the COVID-19 pandemic for public finance, in particular the finances of local government units. The analyses demonstrate a shift in the urban municipalities revenue structure in Poland, which is the effect of a decreased share of own revenue, especially tax revenue, and an increase in the share of transfer revenue. This was due to three factors. Two of them were directly related to the COVID-19 pandemic, i.e 1) reduction in tax revenue (mainly from shares in PIT) as a result of the lockdown and the economic crisis; 2) options of support for local governments in the form of increasing transfer revenue. The third factor that contributed to the decline in own revenue are changes unrelated to the pandemic. These include, for example, changes in personal income tax or changes in the “Family 500+” programme.

Economic Growth Effects of Fiscal Policy in South Africa: Empirical Evidence from Personal Income Tax

Economic Growth Effects of Fiscal Policy in South Africa: Empirical Evidence from Personal Income Tax

The effect of legislated tax changes on the trade balance: Empirical evidence for the United States, Germany, and the United Kingdom

This study uses a narrative account of quarterly discretionary changes in tax liabilities from 1974Q4 to 2018Q2 in a VAR setting to examine whether legislative tax changes affect the trade balance in the US, Germany, and the UK. Six different types of legislative tax changes are considered, including indirect tax changes, personal income tax changes, and business tax changes. The results show that, in general, reductions in aggregated tax liabilities tend to reduce exports in the US and the UK, whereas imports tend to increase, leading to a fall in the net-exports-to-GDP ratio. However, this pattern does not necessarily hold for disaggregated tax changes. Moreover, the results for Germany differ from those for the US and the UK. Overall, the economic magnitude of the estimated effects of tax changes on trade variables is relatively small.

Household indebtedness and the macroeconomic effects of tax changes

This study investigates whether household indebtedness influences the macroeconomic effects of U.S. tax changes. By applying a state-dependent local projection method to the exogenous tax shock series, we find that a tax cut is more effective in stimulating output when the economy is characterized by higher household indebtedness. The household debt-dependent tax policy is primarily driven by (i) the response of private consumption, not private investment; (ii) changes in personal income tax, not corporate income tax, suggesting the relevance of a higher MPC of constrained households in understanding the documented state dependence. In response to a tax cut, labor supply also increases more during a high-debt state, which is consistent with the micro-level evidence on the labor supply of constrained households, thereby contributing to higher tax multipliers. Our findings are robust to a battery of sensitivity checks, especially controlling for the additional states of the economy considered in the literature.

IMPACT OF CHANGES IN PERSONAL INCOME TAX ON TAXPAYERS WORK INCOME

Compared to other countries, following the World Bank analyses, Latvia compared to other countries of the European Union before 2018 tax reforms had relatively high labour taxes but very low capital taxes. It is important that tax reform from 2018 has given some impact on tax burden for all tax payers, including employers. Reducing tax burden can make impact on consumption of goods and services, employer’s competitiveness. The aim of the research is to study the changes in personal income tax since 2018 and their impact on earned income. The author studied the impact of changes in personal income tax on labor income in different categories and developed proposals on how to improve personal income tax in order to increase the net labor income of employees.

Method of Management of Personal Income Tax Changes Implemented by the Polish Deal

Method of Management of Personal Income Tax Changes Implemented by the Polish Deal

The Effect of Legislated Tax Changes on the Trade Balance: Empirical Evidence for the United States, Germany, and the United Kingdom

Using a narrative account of quarterly discretionary changes in tax liabilities from 1974Q4 to 2018Q2 in a VAR setting, we study whether legislative tax changes affect the trade balance in the United States, Germany, and the United Kingdom. As legislative tax changes we consider (i) all changes, (ii) personal income tax changes, (iii) business tax changes, (iv) indirect tax changes in Germany and the UK, (v) spillovers of US tax changes into Germany and the UK, and (vi) asymmetric reactions after tax hikes and cuts. Generally, we find that after a reduction in aggregated tax liabilities, imports and exports in the US and Germany react quite similarly: imports tend to rise; exports do not change much. Consequently—and fostered by growing output—the net-exports-to-GDP ratio decreases. We find no clear net effect in the UK. Instead, UK imports only increase after cuts to indirect taxes. However, employing normal variations of the tax changes as a yardstick, the economic magnitude of the estimated effects on the trade variables is not particularly large. Thus, there remain doubts as to whether tax policy is an effective in-strument for addressing trade imbalances.

New Fiscal Package in Kosovo and Its Impact on Economy

In order to create a more flexible system for citizens and businesses in Kosovo, the Government of Kosovo made a decision by which from 1 April 2014 increased the salaries for 25% for employees receiving salaries and pensioner compensation and other social categories from the Kosovo budget. This Government decision carries some problems with regard to public finance management and impact on the country's economy by creating a new reality in the payroll and public spending. Direct impact of this document: Decision No: 01/176. 10 March 2014, are: First, the increase in wage expenditures was not planned in the Medium Term Expenditure Framework 2014-2016 and this has given an indication of macroeconomic inefficiency (Assessed by the Kosovo Finance Ministry). Secondly, this increase decreases capital investment costs, which have the greatest potential to generate economic growth. Thirdly, wage growth along with spending on the Pristina-Skopje highway is expected to increase the budget deficit over the fiscal rule. Such a situation was also present at the time of investments in the Motorway Vermicë - "Nations connection way". In order to balance the increase of budget expenditures with revenues, the International Monetary Fund (IMF), at the conclusion of the Kosovo visit in March 2015, suggested to the Government of Kosovo that in the continuation of the increase of the various excise duties to see the possibilities for growth Value Added Tax (VAT) which would bring a substantial increase in budget revenues. At the 20th meeting of the Government of Kosovo, dated 24 March 2015, during this IMF visit, the Government took a series of decisions on fiscal changes. Among other things, these decisions have to do with the approval of new draft laws: 1. Changes in Value Added Tax (VAT); 2. Changes in Corporate Income Tax; 3. Changes in Personal Income Tax; and 4. Changes in excises duties of cars, tobacco, and alcoholic beverages etc. Based on the analysis of these changes and their effects, one can make an assessment of the economic and fiscal effects of the aforementioned laws. Some of the key findings of this study-analysis section show that small businesses will be negatively impacted by lowering the VAT threshold, while the abolition of VAT on machinery and raw materials will lower the cost of production and potentially increase investments in manufacturing sectors. Reform in fiscal policy encourages greater investment in production and at the same time improves business liquidity. According to an estimate by the Ministry of Finance, businesses will have about 27.6% cheaper start of production process. Keywords: Kosovo budget.,VAT, Tax, IMF, Ministry of Finance, fiscal

Tax policy and housing prices: evidence from Vietnam using event study approach

This paper examines the effect of tax policy on housing prices in Vietnam for the period from October 2004 to September 2016 using event study approach. The authors find that all five key changes made to the personal income tax, corporate income tax and non-farm land use tax have caused the housing prices to decline on average 6-11% during the event window, but only the impact of the personal income tax changes is statistically significant. The fact that changes in housing prices are mostly seen prior to the effective date of the tax policy change implies that tax policy change indeed has influenced the housing prices in Vietnam. Although this research has not examined the mechanism through which tax policy has influenced the housing prices, the findings offer some implications for the government in terms of using tax policy for controlling housing prices in Vietnam. The research is also of very few papers in this literature that use the event study approach.

Comparing the effects of discretionary tax changes between the US and the UK

Abstract The remarkable similarities of the effects of discretionary tax changes between the US and the UK, shown in (Cloyne, J. 2013. “Discretionary Tax Changes and the Macroeconomy: New Narrative Evidence from the United Kingdom. American Economic Review 103: 1507–1528.), raise the obvious concern whether the effects of tax changes at disaggregated levels in the UK still resemble those in the US. This paper investigates the issue along three dimensions – corporate and personal income tax changes, anticipated and unanticipated tax changes, and positive and negative tax changes. An important contribution of this paper is to construct a data set on exogenous changes of corporate and personal income taxes in the UK, identified from narrative sources along the lines of Cloyne (2013).

Evaluation of the Impacts of Selected Tax Reforms Influencing the Income of Individuals in the Czech Republic

Ability to predict the impacts of proposed tax changes is crucial for effective and transparent tax policy. The ex-ante impact evaluation of proposed changes is in the Czech Republic part of the Regulatory Impact Assessment process and assumed effects are published within the reasoning reports to the amendment laws. We use the top-down approach to calculate ex-post the impacts of the most significant changes in personal income tax and contribution on obligatory insurance on public revenues and compare the results with forecasted effects from reasoning reports. We use data for the period of 1994 to 2014 and create three models to quantify the impact on personal income tax revenue, social security contribution and health insurance contribution. The results show the tendency to underestimate real effects about a third to a half when calculating the projected impact on public revenues. For more accurate estimations we recommend higher transparency in presented methodology within the Regulatory Impact Assessment process and evaluation by independent institution for changes with significant impact.

INFLUENCE OF PERSONAL INCOME TAX ON THE MUNICIPALITIES’ INCOME / GYVENTOJŲ PAJAMŲ MOKESČIO ĮTAKA SAVIVALDYBIŲ PAJAMOMS

The article analyzes the impact of Lithuanian Republic personal income tax changes on municipality budget and the factors influ -encing that change. This area of Lithuanian practice is evaluated, applied methodical positions are discussed, an overview of other countries’ practical experience and theoretical work is presented. Personal income tax in European countries is one of the main taxes, but the existing framework of personal income tax and the taxation policies, as defined in each country, influence the policy of personal income tax in various European countries. The study showed that the total amount of collected personal income taxes increases each year (2009 – 2,411 millions Lt., in 2013 – 3,723 millions Lt.). The analysis showed that the personal income tax collection is influenced by the average wage (correlation coefficient – 0.72), number of employees (correlation coefficient – 0.87) and tax­exempt income (ratio or correlation – 0.72). Straipsnyje yra analizuojama Lietuvos Respublikos gyventojų pajamų mokesčio pokyčio įtaka savivaldybių biudžeto pajamoms bei šiam pokyčiui įtaką darantys veiksniai. Vertinama šios srities Lietuvos praktika, aptariamos taikomos metodinės nuostatos, apžvelgiama kitų valstybių praktinė patirtis ir teoriniai darbai. Gyventojų pajamų mokestis Europos valstybėse yra vienas iš pagrindinių mokesčių, tačiau atskirų šalių gyventojų pajamų apmokestinimo politiką lemia galiojanti gyventojų pajamų apmokestinimo sistema bei apmokestinimo politikos gairės, kurias apibrėžia kiekviena šalis. Tyrimo metu nustatyta, kad gyventojų pajamų mokesčio surinkimo suma didėja kiekvienais metais (2009 m. – 2,411 mln. Lt, o 2013 m. – 3,723 mln. Lt.). Atlikta analizė parodė, kad gyventojų pajamų mokesčio surinkimui įtaką daro vidutinis darbo užmokestis (koreliacijos koeficientas – 0,72), dirbančiųjų skaičius (koreliacijos koeficientas – 0,87) ir neapmokestinamosios mokestinės pajamos (koreliacijos – 0,72).

Wpływ kryzysu finansowego na politykę podatkową Republiki Irlandii

The aim of this paper is to present and evaluate the changes introduced by the Irish government in the tax system and their influence on tax revenues. The first part offers a brief summary of the overall structure of the state tax system, identifying elements of tax construction and the changes caused by the financial crisis. The second part focuses on the major changes in personal income tax and capital taxes, which entailed raising the tax rate, the reduction and abolition of tax relief and the introduction of new taxes, such as a levy on financial institutions and the domicile levy. The other taxes have hardly been modified but their share of, and influence on, tax revenue is less significant.

Distribution of personal income tax changes in Slovenia

Slovenia belongs to a group of EU member states that have reduced their personal income tax burden during the late-2000s financial and economic crisis. The latest changes, introduced in the personal income tax system during the last two years, have primarily reduced the tax burden on low-income taxpayers. However, this was only the last step in a series of personal income tax reforms since 2004 that have reduced the average tax burden on all taxpayers. Using an exclusive database of taxpayers and utilising a general-equilibrium modelling platform, an approach that is unfortunately still rare in Central and Eastern European countries, we assess the consequences of these reforms at both the micro and the macro level. From a macroeconomic point of view, the initial positive consequences of higher private consumption and welfare are declining over time owing to the increased budget deficit and reduced investment.

Slovenian income taxes and analysis of their tax expenditure in 2006-2010

Tax expenditure analyses have been an important element in the supervision of reform processes linked to implementing different kinds of tax incentive and the management of a correct tax policy. The paper provides an evaluation of tax expenditure in Slovenia relating to personal income tax and corporate income tax. Four consecutive tax years were selected for the calculation of the tax expenditure on personal income tax (2006-09), while three consecutive years were selected for the corporate income tax calculation (2008-10). The tax expenditure calculated for personal income tax was highest in 2006 and reached 5.2% of GDP. After several changes in personal income tax, expenditures decreased to around 3% of GDP in the following three years. The tax expenditure calculated for corporate income tax was much lower as compared to GDP than for personal income tax, reaching around 0.2% of GDP.

Impact of personal income tax changes on citizens’ tax burden

In an eff ort to ensure more equity in personal income taxation, the Croatian Government adopted a new, amended Personal Income Tax Act that entered into force on 1 March 20121 . The new amendments should provide a basis for increasing the net income for lower income categories and reducing the net income for higher income groups2 . As a result of increasing the personal allowances and of changes in tax brackets (Table 1), the general government budget revenues are expected to fall by about HRK 340 million annually, thus increasing the disposable income of households. Moreover, the Government has introduced a new taxable income category, i.e. dividends and profi t sharing proceeds, as well as a tax on the pension supplement, which now becomes part of the pension. It has also introduced the taxation of foreign pensions in the same manner as domestic pensions. The purpose of these measures is to increase tax revenues by about HRK 290 million. The expected consequence of these legislative changes is a reduction in tax revenues by about HRK 50 million. The following analysis will try to establish whether these changes will meet Government expectations and who the winners and losers are in the new tax scheme.

A Decomposition of the Personal Income Tax Changes in Italy: 1995–2000

The effects of personal income tax changes are usually analyzed by comparing the inequality of income distributions before and after the tax policy change on a fixed pretax income distribution. This constant-population methodology aims at isolating the redistributive effect of the tax legislation. On the basis of the OECD's 1987 analysis, this paper proposes a methodology to disentangle the pure effect of tax changes from the influence of other nontax factors when the pretax income distribution is not fixed. For the Italian case, it is shown that the additional redistributive outcome displayed by changes of tax laws between 1995 and 2000 is only one-fourth of the total change of the redistributive impact in the same period and is outweighed by the effect of inflationary fiscal drag.

Consumer anticipation of income tax changes

The paper synthesizes existing consumption theories to suggest that consumers modify their consumption, savings, debt, and asset acquisition behavior in advance of well-publicized changes in federal personal income tax changes. Existing cross-section and time series data document such adjustments prior to enactment of the 1964, 1968, and 1975 federal income tax revisions. Uncertainty reinforces tax-increase anticipation effects and moderates tax decrease anticipation effects. Further, the response to actual tax changes is reduced, and may even be offset, by consumers' anticipatory actions. The theory and data presented help resolve controversy surrounding the effectiveness of the 1968 tax increase.

Recent Changes in Personal Income Tax

The amendments to the Australian system of personal income tax effected in the 1975–76 budget and in the measures announced by the Treasurer on 20 May constitute the first major change in the system since 1950. The legislation of that year established a structure of tax rates and concessional deductions which remained substantially unaltered for 25 years. During that period, the shape and impact of the personal income tax was affected more by inflation than by legislative change, most of which was concerned either with closing loopholes or with monetary adjustments consequent on inflation.