In the current difficult situation, it is especially important for Georgia to choose a pragmatic way and not to be overwhelmed by emotions – this applies to health care measures as well as economic policy.
We are pleased to present the twelfth issue of 4liberty.eu Review, titled “Taxing Taxation: Labor and Capital in CEE”. This time our primary focus is the taxation of labor and capital – from the cases of Poland and the Czech Republic, to Ukraine, Bulgaria, and Bosnia and Herzegovina.
Taxation is an involuntary payment levied on various entities in order to finance the state budget1. Clearly, the tax burden is heavily influenced by the philosophy of the role of the state in the public life, as well as quantity and quality of public services rendered.
The final effect of the carbon tax is determined by the way in which additional resources are handled. Every tax results in reallocation of scarce resources for purposes less desired by consumers. Not only do taxes diminish the utility of a consumer, but they also have a negative impact on economic growth.
Sectoral tax, i.e. higher taxation, which affects only selected sectors of the economy (such as banking, insurance, energy, telecommunications, or the information technology segment) is considered to be an effective tool for increasing state budget revenues.
Currently, the Czech Republic does not have a separate capital gains tax for individuals or for corporations; capital gains are included in PIT and CIT. There are also a few cases in which capital gains are exempt, mainly pertaining to property.
The fiscal burden of labor in the Federation of Bosnia and Herzegovina is one of the largest in Europe. Although living among the poorest countries on the continent, workers in Bosnia and Herzegovina pay a lot to a high tax wedge, which is over 40%.
A simplified tax system is one of the essential tools for supporting small and micro businesses and self-employment in Ukraine. Entrepreneurs who are using a simplified system pay a fixed amount of tax or a fixed percentage of income.
Taxes come in different forms and shapes. Regardless, they all have certain consequences. The discussion about what is the optimal size of the state, and which public expenditures are justified and beneficial never tires.