| By: |
Hrvoje Šimović |
| Abstract: |
Tax expenditures include all reliefs and other tax procedures used for
reducing or deducting the amount of tax that would otherwise have to be paid
by taxpayers. There are many personal income tax expenditures in Croatia and
they represent an important segment of the tax and social policies. This paper
analyses the effect of expenditures in personal income taxation in Croatia on
horizontal equity. Accordingly, the analysis has been made according to
sources of income. The paper includes the period since 2001, when most reliefs
that are still in effect were introduced into the personal income tax system.
The analysis includes only those taxpayers who filed annual personal income
tax returns, which is a precondition for acquiring most of the tax reliefs.
The research findings show that tax reliefs significantly reduce the amount of
taxable income, and the differences in the effective tax burden between the
analyzed sources of income show that there is horizontal inequity in the
personal income tax in Croatia. |
| Keywords: |
personal income tax, annual tax return, tax expenditures, reliefs, horizontal equity, Croatia |
| JEL: |
H24 |
| Date: |
2012–06–14 |
| URL: |
http://d.repec.org/n?u=RePEc:zag:wpaper:1203&r=pub |