LEGISLATOR’S COMMITMENT TO THE FUNDAMENTAL (SOCIAL) TAX PRINCIPLES IN THE CONTEXT OF THE DESIGN OF INCOME TAX SYSTEM IN THE REPUBLIC OF CROATIA

Abstract

Because of its basic structural feature of adaptability to the taxpayer’s economic capacity, personal income tax is one of the basic instruments for achieving tax equity. The progressiveness of the personal income tax system does not exclusively affect the realization of the redistributive principle; it is also considered as a suitable instrument for mitigating or annulling the negative consequences of the regressive effect of indirect taxes, primarily value added tax. In addition, the funds collected from personal income tax, as a shared tax, represent the most generous source of funding for local and regional self-government units and public services which they provide to their residents. Having this in mind, if the development of the Croatian personal income tax system is observed, especially in the last ten years, the question arises whether it succeeds in achieving its basic functions: fiscal and social.

Keywords

• personal income tax
• compensatory progression
• absolute progression
• redistributive principle
• local and regional selfgovernment units