Acta Univ. Agric. Silvic. Mendelianae Brun. 2016, 64(4), 1401-1407 | DOI: 10.11118/actaun201664041401

Evaluation of the Impacts of Selected Tax Reforms Influencing the Income of Individuals in the Czech Republic

Jana Tepperová, Jan Pavel
University of Economics in Prague, Faculty of Finance and Accounting, Department of Public Finance, W. Churchill Sq. 4, Prague 3, Czech Republic

Ability to predict the impacts of proposed tax changes is crucial for effective and transparent tax policy. The ex-ante impact evaluation of proposed changes is in the Czech Republic part of the Regulatory Impact Assessment process and assumed effects are published within the reasoning reports to the amendment laws. We use the top-down approach to calculate ex-post the impacts of the most significant changes in personal income tax and contribution on obligatory insurance on public revenues and compare the results with forecasted effects from reasoning reports. We use data for the period of 1994 to 2014 and create three models to quantify the impact on personal income tax revenue, social security contribution and health insurance contribution. The results show the tendency to underestimate real effects about a third to a half when calculating the projected impact on public revenues. For more accurate estimations we recommend higher transparency in presented methodology within the Regulatory Impact Assessment process and evaluation by independent institution for changes with significant impact.

Keywords: personal income tax, tax reforms, tax revenues, social security contribution, health insurance contribution
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The contribution is processed as one of the outputs from the research project of the Faculty of Finance and Accounting, University of Economics in Prague, which is carried out within the institutional support of University of Economics in Prague number IP 100040.

Prepublished online: August 30, 2016; Published: September 1, 2016  Show citation

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Tepperová, J., & Pavel, J. (2016). Evaluation of the Impacts of Selected Tax Reforms Influencing the Income of Individuals in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(4), 1401-1407. doi: 10.11118/actaun201664041401
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