IDEAS home Printed from https://ideas.repec.org/a/aiy/jnljtr/v8y2022i1p54-68.html
   My bibliography  Save this article

Determinants of the Proportional Income Tax Revenue: A Comparative Assessment of Russia and Bulgaria

Author

Listed:
  • Stoyan Tanchev

Abstract

Initially flat-rate income taxes only existed in tax havens, but presently, 26 countries have adopted the proportional tax as a fiscal instrument to increase budget revenues and accelerate economic growth. This article empirically examines the determinants affecting the revenues from a proportional income tax with non-taxable minimum (negative flat tax) used in Russia and a proportional income tax without non-taxable minimum (pure flat tax) used in Bulgaria. The research objective is to estimate the impact of the macroeconomic variables such as gross disposable income, employment, gross capital formation and government expenditures on the revenue from the proportional income tax in Russia and Bulgaria. The study employs an ordinary least square (OLS) method and quarterly seasonally adjusted data for the period 2008–2020. For Russia, quarterly seasonally adjusted data for the period from March 2008 till December 2020 were used, including 52 observations. For Bulgaria, quarterly seasonally adjusted data for the period from March 2008 till March 2020 were used, including 49 observations. Basing on the results, it may be inferred that the increase of the gross disposable income and higher marginal tax rate of the proportional tax with a non-taxable minimum collect more nominal revenue in the budget, as Russia’s example showed. The increase of the employment related with a lower marginal tax rate of the proportional income tax without a non-taxable minimum collect less nominal revenue as Bulgaria’s example shows. A standpoint of the revenue in the budget the proportional income tax with non-taxable minimum is more effective than proportional income tax without non-taxable minimum.

Suggested Citation

  • Stoyan Tanchev, 2022. "Determinants of the Proportional Income Tax Revenue: A Comparative Assessment of Russia and Bulgaria," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 8(1), pages 54-68.
    • Handle: RePEc:aiy:jnljtr:v:8:y:2022:i:1:p:54-68
    DOI: https://doi.org/10.15826/jtr.2022.8.1.108
    as

    Download full text from publisher

    File URL: https://jtr.urfu.ru/fileadmin/user_upload/site_15907/2022/Tanchev.pdf
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.15826/jtr.2022.8.1.108?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Andreas Peichl, 2014. "Flat-rate tax systems and their effect on labor markets," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-61, October.
    2. repec:iza:izawol:journl:y:2014:p:61 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vasilev, Aleksandar, 2015. "Welfare gains from the adoption of proportional taxation in a general-equilibrium model with a grey economy: the case of Bulgaria's 2008 flat tax reform," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 48(2), pages 169-185.
    2. Ravi Kanbur & Tuuli Paukkeri & Jukka Pirttilä & Matti Tuomala, 2018. "Optimal taxation and public provision for poverty reduction," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(1), pages 64-98, February.
    3. Stoyan Tanchev, 2021. "How the proportional income taxation increases inequality in Bulgaria," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 7(3), pages 244-254.
    4. Rolf Aaberge & Ugo Colombino, 2018. "Structural Labour Supply Models and Microsimulation," International Journal of Microsimulation, International Microsimulation Association, vol. 11(1), pages 162-197.
    5. Pántya, József & Kovács, Judit & Kogler, Christoph & Kirchler, Erich, 2016. "Work performance and tax compliance in flat and progressive tax systems," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 262-273.
    6. Bibek Adhikari & James Alm, 2016. "Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods," Southern Economic Journal, John Wiley & Sons, vol. 83(2), pages 437-463, October.
    7. Paukkeri, Tuuli, 2018. "Essays on public economics," Research Reports P72, VATT Institute for Economic Research.
    8. Ravi Kanbur & Tuuli Paukkeri & Jukka Pirttilä & Matti Tuomala, 2018. "Optimal taxation and public provision for poverty reduction," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(1), pages 64-98, February.
    9. Massimo Baldini & Leonzio Rizzo, 2021. "Flat Tax: European Experiences and the Italian Proposals," Hacienda Pública Española / Review of Public Economics, IEF, vol. 238(3), pages 137-162, September.

    More about this item

    Keywords

    tax revenue; proportional income tax; negative flat tax; pure flat tax; OLS method;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aiy:jnljtr:v:8:y:2022:i:1:p:54-68. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalia Starodubets (email available below). General contact details of provider: https://edirc.repec.org/data/seurfru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.