Open AccessTax reforms and income inequality in former Yugoslav countries: Escaping the avant-garde neoliberalism in the income tax policy
Author(s) -
Jelena Žarković Rakić,
Marko Vladisavljević
Publication year - 2021
Publication title -
panoeconomicus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.289
H-Index - 14
eISSN - 2217-2386
pISSN - 1452-595X
DOI - 10.2298/pan2102231z
Subject(s) - economics , gross income , context (archaeology) , microsimulation , inequality , serbian , poverty , income tax , labour economics , economic inequality , allowance (engineering) , tax reform , state income tax , public economics , economic growth , geography , mathematical analysis , linguistics , philosophy , mathematics , archaeology , transport engineering , engineering , operations management
After the breakup of former Yugoslavia Croatia, Serbia and Slovenia followed different income tax reform trajectories that could explain currently different levels of income inequality in these countries. Our paper analyzes redistributive effects of introducing progressive tax systems, like the ones currently implemented in Slovenia and Croatia, in the Serbian context. Using microsimulation modeling and Survey on Income and Living Conditions data for 2017 our results suggest that implementation of both Croatian and Slovenian tax system would yield lower levels of income inequality and poverty if applied in Serbia. Slovenian system achieves larger decrease in inequality due to higher tax burden on the top incomes and brings significant increase in tax revenues. Croatian tax schedule achieves stronger decrease in poverty as more generous personal allowance exempt higher portions of low incomes from labour taxes.