DOI: https://doi.org/10.18371/fcaptp.v3i26.144121

DIRECTIONS FOR IMPROVING THE SOCIAL DIVERSITY OF INCOME TAXATION OF PRIVATE INDIVIDUALS IN UKRAINE

P. K. Bechko, L. V. Barabash, N. V. Bondarenko, S. A. Vlasiuk

Abstract


Taxation of personal income is one of the largest sectors of the tax system. The mechanism of its taxation applies to all citizens of the state and, therefore, this tax is an effective element of the implementation of state social policy. However, in Ukraine, at the present stage, this function of the personal income tax is not implemented.

That is why the purpose of the article was to study the current mechanism of taxation of personal incomes in Ukraine and to find directions for its improvement in order to strengthen the social orientation of this sector of taxation.

The tax on personal income in Ukraine plays an important role in filling budgets of different levels. However, a detailed study of the mechanism of its functioning revealed a number of problems that provoke a significant social stratification of the population, reduce the level of payment and tax capacity of citizens and contribute to the formation of a high level of shadow income. So, the last mentioned increased by 22 per cent in 2010-2016.

Despite these emingly broad base of taxation and the loyal rate of personal income tax, Ukraine has a low share of wage taxes in the gross domestic product of the state. This indicates significant volumes of tax evasion in this area. In particular, in 2016 it amounted to 5.8% in Ukraine, while its average value in Europe is 18.6 per cent.

The revealed shortcomings contributed to the formation of proposals to improve the mechanism of taxation of individuals’ incomes. Thus, the first step is the reduction of the non-taxable minimum to the subsistence minimum. In order to strengthen the social function of this sector of taxation, a progressive system of tax rates should be introduced, based on the volume of received income. Taking into account the coefficient of family taxation in determining the tax base will be next. The mechanism of phased implementation of the concept of family taxation is proposed on the basis of perfection of the above elements. This should change the current system of personal income taxation.

Proposed improvements will help to optimize the social level of taxation of individuals’ incomes, increase the living standards of citizens, reduce the level of the shadow sector and increase the income of budgets of different levels.


Keywords


personal income tax; family taxation; non-taxable minimum; subsistence minimum; socialization of taxation.

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Copyright (c) 2018 P. K. Bechko, L. V. Barabash, N. V. Bondarenko, S. A. Vlasiuk

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ISSN (print) 2306-4994, ISSN (on-line) 2310-8770