№ 1/2019

Fìnansi Ukr. 2019 (1): 30–49https://doi.org/10.33763/finukr2019.01.030

TAX POLICY

LJUTYJ Igor ¹, IVANYIUK Victoria ²

¹Taras Shevchenko National University of Kyiv
OrcID ID : https://orcid.org/0000-0002-3561-2432
²Taras Shevchenko National University of Kyiv

Personal income taxation in Ukraine: current issues of modernization

The article reveals the relationship between the fiscal, social and regulatory functions that are performed by the subsystem of personal income taxation in the general taxation system. Special attention is paid to the potential for the taxation of personal incomes to help increase the level of economic activity of the population, balanced taxation of individual / family income in terms of its (taxation) impact on household behavior in the areas of consumption (expansion of effective demand), savings (incentives of a targeted nature) and investments (in own human capital and economic activity as sources of income). In accordance with this, the main directions of modernization of the taxation of personal income in Ukraine are justified, taking into account the real state of its economy, significant differentiation of income and living standards of the population. The preferential instruments of the taxation of personal income, including the tax rebate and tax social benefit, are analyzed. Proposals for amending the relevant articles of the Tax Code of Ukraine in order to increase the efficiency of using these tools are formulated. It is concluded that there is a conceptual lack of tax social benefits, namely that the order of its application does not ultimately provide the taxpayer with an amount of net income that would be no less than the actual subsistence minimum. The use of both tax rebates and tax social benefits are selective in terms of the contingent and taxpayers\' income, which violates the principle of equality of all taxpayers before the law and the prevention of any manifestations of tax discrimination, fixed in subparagraph 4.1.2. Article 4 of the Tax Code of Ukraine. It is emphasized that without a progressive taxation of personal incomes it is impossible to build a welfare state. The transition to progressive taxation will yield positive results only if the scale of the shadow economy is minimized, overcoming the corruption of the tax administration system, restoring the independence of the judiciary, and ensuring effective state protection of human and property rights.

Keywords:tax system, taxation, income of individuals, tax deduction, tax social benefit, non-taxable minimum income, real living wage, progressive taxation

JEL: H21, H24, H31

Ljutyj I. . Personal income taxation in Ukraine: current issues of modernization / I. . Ljutyj, V. Ivanyiuk // Фінанси України. - 2019. - № 1. - C. 30-49.

Article original in Ukrainian (pp. 30 - 49)

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