Naslov
Lump sum tax for small business: The case of Croatia

Autori
Blažić, Helena ; Dimitrić, Mira ; Škalamera-Alilović, Dunja

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Public Administration and Public Policy in Emerging Europe & Eurasia: For Professionalism, Impartiality and Transparency / - : NISPAcee, 2007

ISBN
80-89013-28-7

Skup
Public Administration and Public Policy in Emerging Europe & Eurasia: For Professionalism, Impartiality and Transparency

Mjesto i datum
Ljubljana, Slovenija, 11.06.2006. - 13.06.2006

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
small business; lum sum tax; Croatia

Sažetak
The objective of the paper is to explore the reasons pro and contra for lump sum taxation for smallest of small businesses in Croatia, to analyse causes of its failure and to propose its future changes to make it effective. The research methodology includes comparative analysis, face to face interviews – field research and quantitative desk research using applicable calculations. The efficiency arguments speak in favour of that tax, but the equity arguments not. However, both are mitigated when this tax is optional, as it is mostly the case in other CEE countries implementing that tax. It is usually restricted to the smallest of small businesses. The compliance costs measurement for Croatia showed extremely high and regressive income tax compliance costs of small business owners, that gives a strong argument in favour of introduction of lump sum tax for smallest of small businesses. Our research results indicate that the biggest problem of the Croatian lump sum tax was its assessment base – average wage, since this estimation base is too high. The other problem was the upper limitation (ceiling) for the lump sum taxation – annual turnover below the VAT threshold, which is too low in comparison with the former. So, not only that the lump-sum tax did not pay for the most taxpayers, but it was also in effect not possible to be implemented in businesses where it was beneficial, because their turnover was already above the VAT threshold. Even the saving in compliance costs was not enough attractive to taxpayers to opt for a lump sum tax. That is caused by the high proportion of owner’ s time costs, but also implies high proportion of these costs as tax planning costs and also the fact that they are at the expense of leisure. It could also imply the use of tax planning for tax evasion opportunities. Our proposal is based on the lump sum taxation instead of lump sum income (corrected average wage). The basis for the lump sum assessment could be around 80% of average income of each small business activity. Upper limit for lump sum taxation (VAT threshold) should be reconsidered also.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA