№ 7/2019

Fìnansi Ukr. 2019 (7): 72–91https://doi.org/10.33763/finukr2019.07.072

TAX POLICY

SOKOLOVSKA Alla ¹, RAINOVA Larysa ²

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-1022-8215
²SESE "The Academy of Financial Management"
OrcID ID : https://orcid.org/0000-0002-8275-3094

Influence of taxes on income inequality in Ukraine

Based on the methodological research of western scientists on the impact of the tax system on the inequality of income and wealth, reviewed in the first article of the series publications published in the previous issue of the journal, the impact of tax instruments on the income and wealth inequality in Ukraine is analyzed in the offered article. According to the results of the study, it is determined that due to its design features and the large scale of the use of informal labor, the personal income tax in Ukraine does not perform the function of reducing income inequality. It is not performed by the Ukrainian tax system as a whole due to the large share of indirect taxes in it, the narrow tax base on personal property tax and the low efficiency of tax administration of residential property tax. Although in theory the progressive tax on personal incomes is considered to be the most effective taxation instrument for income redistribution, its introduction in Ukraine is currently considered untimely. A transitional measure for the introduction of such a tax may be a differentiated non-taxable minimum, which is a certain compromise option for providing basic benefits in the context of ensuring compliance with social justice and fiscal efficiency requirements. It is established that the reduction of income inequality can also be facilitated by the introduction of elements of the progressive taxation of certain types of passive personal incomes that are in line with the OECD recommendation designed to mitigate the problem of inequality and poverty: the non-taxable minimum income for bank deposits, ensuring the differentiation of inheritance and gift taxes rates depending on the value of the property.

Keywords:inequality of income and wealth, fiscal instruments for reducing inequality, personal income tax, personal tax allowance, differentiated non-taxable minimum

JEL: E21, H24, I31, I38

Sokolovska A. . Influence of taxes on income inequality in Ukraine / A. . Sokolovska, L. . RAINOVA // Фінанси України. - 2019. - № 7. - C. 72-91.

Article original in Ukrainian (pp. 72 - 91)

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