engleski

Importance of Social-Political Tax Principles in Regards to Personal Income Taxation

Croatian positive tax system is justified by the Article 51 of the Constitution which states that everyone must participate in the settlement of public expenses in accordance with their capabilities. Accordingly, the tax system is based on the principles of fairness and political tax principles. Tax on personal income is the instrument of tax policy that with its inevitable fiscal objective has a much more important objective of a social nature-alleviate regressivity of VAT. Most financial scholars, lawyers or economists, agree that socialpolitical tax principles are tried to be put into practice by applying progressive tax rates on income with the combination of non-taxable part of income. Thus this paper analyses Croatian personal income tax system, by focusing on the taxation of employment income and independent personal services income, their tax base, tax brackets, tax rates and tax credits. The other issue of taxation that is scrutinized is the formation of an optimal tax burden, which means a continuous balance searching. This procedure and the related arguments are presented in this paper.

social-political tax principles, personal income taxation, progressive tax rate, non-taxable part of income, Republic of Croatia

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