Majcen, Boris and Verbic, Miroslav and Cok, Mitja (2007): The Income Tax Reform in Slovenia: Should the Flat Tax Have Prevailed?
Download (469Kb) | Preview
In 2007 Slovenia launched a comprehensive reform of its tax system. This article presents an analysis of several envisaged tax reform scenarios, including the flat tax proposal, with a dynamic general equilibrium model of the Slovenian economy, linked to a microsimulation model. We focus mainly on the macroeconomic and welfare aspects of the proposed scenarios, thus capturing the overall effect on individual taxpayers and the government budget. The main characteristics of the model are presented along with the results of different reform scenarios, including the one that finally passed the parliament and now forms part of Slovenia’s tax system. Our results suggest that options other than the flat tax system are better suited to the country’s long-term economic development.
|Item Type:||MPRA Paper|
|Original Title:||The Income Tax Reform in Slovenia: Should the Flat Tax Have Prevailed?|
|Keywords:||flat tax; general equilibrium model; income inequality; macroeconomic effects; personal income tax; Slovenia; tax reform; welfare analysis|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy
D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models
|Depositing User:||Miroslav Verbic|
|Date Deposited:||09. Sep 2008 06:09|
|Last Modified:||13. Feb 2013 20:12|
Armington, P. S. (1969). ‘A Theory of Demand for Products Distinguished by Place of Production’, IMF Staff Paper No. 16, International Monetary Fund, Washington, DC.
Bayar, A., Mohora, C., Majcen, B., Čok, M., Opese, M., Verbič, M. and Kump, N. (2006). An Analysis of Complex Sectoral and Macro Effects of the Tax Reform and Reform of Social Transfers with a Dynamic General Equilibrium Model of the Slovenian Economy. Ljubljana: Institute for Economic Research.
Blažić, H. (1999). ‘Consumption as a Measure of Equality: The Example of Croatia’, Financijska praksa, 23(3), pp. 355-374.
Cajner, T., Grobovšek, J. and Kozamernik, D. (2006). ‘Welfare and Efficiency Effects of Alternative Tax Reforms in Slovenia’, International Academic Forum on Flat Tax Rate, 3-4 February 2006. Bled: Centre of Excellence in Finance.
Camida, K. and Goudswaard, K. (2001). ‘Does a Flat Rate Individual Income Tax Reduce Tax Progressivity? A Simulation for the Netherlands’, Public Finance and Management, 1(4), pp. 471-499.
Chamber of Accountants, Financials and Auditors of Slovenia (2007). Provisions on Charges. Ljubljana: Chamber of Accountants, Financials and Auditors of Slovenia.
Cowell, F. A. (1977). Measuring Inequality. Oxford, UK: Philip Allan Publishers.
Derviş, K., de Melo, J. and Robinson, S. (1982). General Equilibrium Models for Development Policy. Cambridge, UK: Cambridge University Press.
Dixon, P. B. and Rimmer, M. T. (2002). Dynamic General Equilibrium Modeling for Forecasting and Policy: A Practical Guide and Documentation of MONASH. Amsterdam: North-Holland.
European Commission (2006). Structures of the Taxation Systems in the European Union, 1995-2004. Brussels: Office for Official Publications of the European Communities.
GAMS Development Corporation (2006). GAMS – A User’s Guide. Washington, DC: GAMS Development Corporation.
Geary, R. (1950). ‘A Note on a Constant Utility Index of the Cost of Living’, Review of Economic Studies, 18, pp. 55-56.
Government of the Republic of Slovenia (2005). The Programme of Reforms for the Implementation of the Lisbon Strategy in Slovenia. Ljubljana: Government of the Republic of Slovenia.
Government Office for Growth (2005). Guidelines for Economic and Social Reforms for the Increase of Economic Growth and Employment. Ljubljana: Government Office for Growth of the Republic of Slovenia.
Hall, R. E. and Rabushka, A. (1985). The Flat Tax. Stanford: Hoover Institution Press.
Harrison, G. W. and Kriström, B. (1999). ‘General Equilibrium Effects of Increasing Carbon Taxes in Sweden’, in Brännlund, R. and Gren, I.-M. (eds.), Green Taxes: Economic Theory and Empirical Evidence from Scandinavia, Cheltenham, UK: Edward Elgar, pp. 59-108.
International Bureau of Fiscal Documentation (2006). European Tax Handbook. Amsterdam: International Bureau of Fiscal Documentation.
Ivanova, A., Keen, M. and Klemm, A. (2005). ‘The Russian ‘Flat Tax’ Reform’, Economic Policy, 20(43), pp. 397-444.
Keen, M. (2006). ‘The Flat Tax: Experience and Evidence’, International Academic Forum on Flat Tax Rate, 3-4 February 2006. Bled: Centre of Excellence in Finance.
Krajčir, Z. and Odor, L. (2005). ‘First Year of the Tax Reform, or 19 Percent at Work’, Economic Analysis No. 8, Financial Policy Institute, Ministry of Finance of the Slovak Republic, Bratislava.
Larsen, T. (2006). ‘A Flat Tax in Denmark?’, International Academic Forum on Flat Tax Rate, 3-4 February 2006. Bled: Centre of Excellence in Finance.
Löfgren, H., Harris, R. L. and Robinson, S. (2002). ‘A Standard Computable General Equilibrium (CGE) in GAMS’, IFPRI Microcomputer Series No. 5, International Food Policy Research Institute, Washington, DC.
Majcen, B., Čok, M., Verbič, M. and Kump, N. (2007). Development and Usage of the Microsimulation Model. Ljubljana: Institute for Economic Research.
Ministry of Finance (2006). The Financial Consequences of the Proposed Personal Income Tax Act. Ljubljana: Ministry of Finance of the Republic of Slovenia.
Ministry of Finance (2007). Bulletin of Government Finance No. 2, Ministry of Finance of the Republic of Slovenia, Ljubljana.
Peichl, A. (2006). ‘The Distributional Effects of a Flat Tax Reform in Germany: A Microsimulation Analysis’, International Academic Forum on Flat Tax Rate, 3-4 February 2006. Bled: Centre of Excellence in Finance.
Stone, R. (1954). ‘Linear Expenditure Systems and Demand Analysis: An Application to the Pattern of British Demand’, Economic Journal, 64, pp. 511-527.
Šušteršič, J., Rojec, M. and Korenika, K. (2005). The Strategy of Development of Slovenia. Ljubljana: Institute of Macroeconomic Analysis and Development.
Varian, H. R. (1992). Microeconomic Analysis: Third Edition. New York: W. W. Norton.