engleski

Advantages and disadvantages of models of personal income taxation concerning employment income and independent personal services income

One of the most important and most represented tax distributions is the one that separates direct and indirect taxes having in mind that when it comes to direct taxes redistribution role is possible because the concept of progressivity is not applicable when it comes to indirect taxes. One of the most important direct taxes is personal income tax which is in most of developed countries one of the most fiscally aboundant tax and tax by which progressive taxation is introduced in tax systems. But recently, there has been rapid swerve when it comes to progressive taxation of personal income. A great number of countries, primarily countries of Eastern Europe and Central Asia, have implemented into their tax systems an institution of flat tax. When the countries of Eastern Europe are in question it should be emphasized that these countries are in fact in the process of transition just like the Republic of Croatia. In the Republic of Coatia we talk about synthetical personal income tax, but with characteristics of analytical model especially when employment income end personal services income are in question. Elements of duality can also be found just like in the other countries that are in the process of transition. In the Republic of Croatia personal income derived from employment income and income derived from independent personal services is taxed via progressive tax rate. Correction of the current system of personal income taxation in the Republic of Croatia is necessary and through detailed analyses we have to find solutions so that the personal income taxation is more in accordance with the principle of fairness in regards to current situation and current timing.

personal income tax ; flat tax ; progressive tax rate ; employment income ; independent personal services income

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