Social and Legal Studios

Abstract

The personal incomes taxation is one of the main tools for ensuring social justice in society through the application of a transparent mechanism for their redistribution. The system of individuals’ incomes taxation in Ukraine combines personal income tax (PIT), military tax and a unified social contribution to the compulsory state social insurance (USC). PIT is an important source of filling budgets of all levels and there is a tendency to increase its share in the structure of tax revenues due to the expansion of the tax base. The low social efficiency of the proportional PIT scale in Ukraine is proved and the necessity of transition to the progressive taxation of citizens’ personal incomes is substantiated in order to reduce the tax burden on incomes of people with low income. The procedure of application of tax social benefit in the course of PIT is revealed and its social effect is estimated. It was established that the growth of the minimum wage in the context of the remuneration legalization policy actually led to the leveling of the role of tax social benefit as a tool for social protection of workers with low income. The introduction of a military tax of 1.5% of individual incomes provided a significant increase in state incomes, but led to a significant growth in the tax burden on incomes of all strata of the population. Despite its apparent antisocial effect, the government does not plan to cancel it in the near future. An important tool for redistributing financial resources for creating social insurance funds is the unified social contribution paid by employers for each employee. The duty of employers to pay the USC at a level, which is not lower than its minimum, guarantees employees the right for a pension and social benefits at the expense of social insurance funds. The paper proposes directions for improving the personal income taxation system, which will enable the quality of social protection to improve and will contribute to the growth of the Ukrainian population welfare

Keywords: taxation system, personal income tax (PIT), military tax, unified social contribution to the compulsory state social insurance (USC)

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