PERSONAL INCOME TAXATION AMID ECONOMIC AND SOCIAL TRANSFORMATIONS
Abstract
The article analyzes the regulatory and social functions of personal income tax during the period of transformation of the labor market and budget system of Ukraine, caused by war, relocation of production and labor force, digitalization, and spread of remote work. A comparative analysis of the regulatory function of personal income tax in Ukraine and European Union countries has been carried out with attention to the effectiveness of tax instruments for low-wage workers. The limitations of the current proportional model of personal income taxation in Ukraine in the context of social justice and income redistribution have been analyzed. The experience of France, Belgium, the Netherlands and Sweden has been examined, particularly the impact of tax deductions, tax credits and in-work benefits on reducing economic inequality. For Ukraine, studying and adapting such practices is of particular relevance. It has been substantiated that combining moderate personal income tax rates with targeted tax deductions or benefits for low-income workers and aligning personal taxation with the social benefit system increases employment, raises gross wages and reduces in-work poverty without additional costs for employers. Special attention is paid to the mechanisms of integrating tax policy with social protection systems to enhance overall effectiveness. Proposals for modernizing the Ukrainian model of personal income taxation have been presented, namely that the modernization of the personal income tax model in Ukraine should be aimed at achieving a strategic balance between fiscal sustainability, active incentives for legal employment and social support for the employed population. The complex of proposed measures, from simplifying tax rules and broadening the tax base to implementing innovative in-work instruments, creates prerequisites for building a balanced, fair and efficient income taxation system. Such a system should be able to adequately respond to challenges caused by economic and social transformations, decentralization processes and structural changes in the labor market, while ensuring fiscal stability and social cohesion of society.
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