Abstract:

Today the importance of personal income tax is determined by its input into the state budget (according to EUROSTAT personal income taxes occupy the second place in fiscal revenues) and in its influence on governmental strategies and goals, such as economic growth, GDP distribution, national competitive ability and labor markets. At the same economic environment also shapes the system of personal income taxation on the whole and its individual elements.

The paper offers a new methodological approach to assess the relationship between the system of personal income taxation and national economy development level. The methods applies a set of characteristics including the average tax burden per an employed person; tax burden of a family with 2 children; tax burden of an employed individual having no children; personal income tax rate; social insurance fund contributions paid by an employee and an employer; average labor costs; GDP and employment growth rates; actual effective exchange rate, GDP per capita; and export to domestic trade ratio. The study revealed that there is actually dependence between national social-economic development and income tax system. However, it is demonstrated only in the countries with low tax burden and low GDP per capita.