Public Finance Quarterly Archive Articles

New Indicator to Measure Tax Burden – Proposal

14:37, június 06, 2020.
András Giday
Candidate in Economic Sciences, Hungary

Tibor Tatay
PhD, D.Sc. (Habilitation), Associate Professor,
University Széchenyi István Department of Economic Analysis, Győr,

Published in: Public Finance Quarterly 2020/2. (p. 263-283.)

Summary: This paper investigates to what extent tax burden can be used to compare countries with different pension systems. It was concluded that in one respect tax burden ratios used by international institutions fail to completely represent the share of income left after taxation, as the contributions paid to occupational pension funds are not included in total tax burden calculations. In our approach, however, in case of pension contributions it is the obligation of the payment itself and not the recipient of payment that matters. To this end, a new ratio called the ‘share of disposable current revenues’ was introduced to indicate the current income employers and employees can dispose of after all mandatory payments have been settled. Mandatory payments in this sense include all payment obligations employers cannot evade to pay to an institution (state, pension fund, etc.)

Keywords: tax burden, social security contribution, contributions to private pension funds, Competitiveness ranking

JEL codes: H20 , H55, J32, O57