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Does Household Tax Burden Have an Impact on Individuals’ Savings in Banks? The Case of Ukraine

Author

Listed:
  • Sudak Gennadiy

    (Ernst & Young Ukraine)

  • Yuliia Savchenko

    (Kyiv National Economic University named after Vadym Hetman, Ukraine)

Abstract

This paper aims to assess the impact of the effective and nominal household tax burden on household deposits in Ukrainian banks. We used the effective tax burden, which includes personal income taxes and value-added tax (VAT) paid. We considered changes in Ukrainian tax law from 2003 to 2016, which included a change from progressive income taxation to proportional income taxation, a decrease in tax rates in 2003, and an increase in tax rates in 2014–2016. The data sample consists of publicly available data on Ukrainian households’ income, savings, and taxes paid in 1996–2019. The analysis was performed using panel regression and the difference-in-difference (DID) method. The tax burden impact on bank deposits is significant and is caused partly by the shadow economy. The results of the study are relevant for Ukraine and countries with similar economies. The methodological approaches developed in the paper can be used for similar studies in other developing countries.

Suggested Citation

  • Sudak Gennadiy & Yuliia Savchenko, 2021. "Does Household Tax Burden Have an Impact on Individuals’ Savings in Banks? The Case of Ukraine," Central European Economic Journal, Sciendo, vol. 8(55), pages 378-389, January.
    • Handle: RePEc:vrs:ceuecj:v:8:y:2021:i:55:p:378-389:n:6
    DOI: 10.2478/ceej-2021-0025
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    direct taxes; indirect taxes; personal income tax; government revenue; taxable income; effective tax burden; consumption; income structure; spending structure; savings; bank deposits; Ukraine;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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