Progresinio gyventojų pajamų mokesčio įtakos Lietuvos nacionalinio biudžeto pajamoms tyrimas

• Main Author: Povilaikaitė, Agnė
• Other Authors: Drakšaitė, Aura, Christauskas, Česlovas
• Format: Bachelor Thesis
• Language: Lithuanian; English
• Published: Institutional Repository of Kaunas University of Technology 2021
• Subjects: personal income tax; proportional and progressive personal income taxation systems; national budget; tax rate; Iceland
• Online Access: https://vb.ktu.edu/KTU:ELABAETD8769275&prefLang=en_US

The Republic of Lithuania Law on Income of Individuals was accepted in 2003 and since then has been adjusted 63 times. Frequent changes of the income tax treatment cause difficulties for both taxpayers and tax administrators. Moreover the changes affect Lithuanian national revenue collection. In order to improve collection of tax revenues, it is essential to implement the reform of the tax system. During pre-election period, most of political parties in their election campaign emphasize the necessity and benefits of progressive personal income tax rate. This issue has repeatedly been raised at meetings of the Seimas where politicians suggest the personal income tax conversion projects. On the other hand, in estimation of several financial analysts and economists implementation of progressive income tax raise doubts about the benefit of progressive personal income tax rates in Lithuania. Different opinions raise the debate and require researches which estimate the effect of the progressive personal income tax rates on public finances. Research object – the impact of progressive personal income tax on Lithuanian national budget revenue. Research aim – to evaluate the impact of implementation of progressive personal income tax rates on Lithuanian national budget revenue. Research results: 1. The analysis of the national implementation of personal income tax peculiarities shows that the progressive personal income tax rates apply to twenty-four countries, whereas the proportional personal income tax rate to seven countries. Northern countries apply a dual income tax system, under which wages subject to progressive, while income from capital - proportional personal income tax rate. In order to assess the tax impact of the budget income, calculated two relative ratios: PIT tax revenue to GDP ratio and PIT tax revenue ratio of all tax revenues. The first value of relative indicator was highest in Scandinavian countries, Belgium, Italy and Iceland, and the second – in Denmark, Iceland, Ireland and Switzerland. The lowest indicator values are in countries applying proportional PIT rate.2. Based on the personal income tax collection in the Lithuanian national budget analysis, it is concluded that the collection of tax revenues is influenced by the personal income tax regime. Essential personal income tax changes were made in 2006, 2008, 2009 and 2014. While assessing the influence of changes in income tax collection, it was observed that after the reform of the Lithuanian state and municipal budgets actual collected tax revenues were lower than planned and lower than in the previous year. In order to improve collection of tax revenues, Lithuania considered introducing progressive personal income tax rates. 3. Assessing the progressive personal income tax system by classic taxation principles (justice, economic efficiency, administrative simplicity, productivity and tax revenue elasticity) that would simultaneously meet all the principles of taxation, is complicated, because they contradict with one another. 4. This analysis has been adapted the personal income tax models of Poland, Croatia, Slovenia and Ireland. The most appropriate option for Lithuania is the implementation of Slovenian or Polish personal income tax system in the essence of revenue. On the other hand, the most damaging would be the Irish and Croatian personal income tax models, as it is probable that tax revenues of Lithuanian national budget would reduce significantly. 5. The analysis of registration of payroll particularities shows that payroll expenditures are recognized on the accumulation principle. Regardless of whether the country is applying a proportional or progressive personal income tax rate, in accounting in both cases employee liabilities are being lowered and liabilities for State Tax Inspection are rising.