Tax Reforms and Income Inequality in Former Yugoslav Countries: Escaping the Avant-Garde Neoliberalism in the Income Tax Policy

Žarković Rakić, Jelena and Vladisavljević, Marko (2021) Tax Reforms and Income Inequality in Former Yugoslav Countries: Escaping the Avant-Garde Neoliberalism in the Income Tax Policy. Panoeconomicus, 68 (2). pp. 231-252. ISSN 2217-2386

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Abstract

After the breakup of former Yugoslavia Croatia, Serbia and Sloveniafollowed different income tax reform trajectories that could explain currently dif-ferent levels of income inequality in these countries. Our paper analyzes redis-tributive effects of introducing progressive tax systems, like the ones currentlyimplemented in Slovenia and Croatia, in the Serbian context. Using microsimu-lation modeling and Survey on Income and Living Conditions data for 2017 ourresults suggest that implementation of both Croatian and Slovenian tax system would yield lower levels of income inequality and poverty if applied in Serbia.Slovenian system achieves larger decrease in inequality due to higher tax bur-den on the top incomes and brings significant increase in tax revenues. Croatian tax schedule achieves stronger decrease in poverty as more generous personalallowance exempt higher portions of low incomes from labour taxes.

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