On the fairness and the redistributive effects of PIT in Central and Eastern European countries

Stoian, Andreea and Vintila, Nicoleta and Tatu, Lucian and Miricescu, Emilian (2018): On the fairness and the redistributive effects of PIT in Central and Eastern European countries.

Abstract

The aim of this paper is to investigate the fairness and the redistributive effects of personal income tax (PIT) in seven Central and Eastern European countries, namely: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Romania. Following Kakwani and Lambert (1998) methodology, we test tax equity and progressivity. We study the asymmetry of salary income distribution in order to examine the horizontal equity among individuals in the same group. We calculate the Gini coefficients in order to investigate the redistributive effects of PIT regulatory frameworks. We find that tax equity is fulfilled by all countries. However, PIT regulations does not allow for strong progressivity and for redistributive effects.

• Item Type: MPRA Paper
• Language: English
• Keywords: horizontal equity; vertical equity; personal income tax; income distribution; inequality; Gini; Central and Eastern European
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies

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