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Labor Taxation in the Western Balkan: Looking Back and Forward
Author:
Mr. Alain Jousten
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,
Mario Mansour
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,
Irena Jankulov Suljagic
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, and
Charles Vellutini
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 239
Language:
English
Publication Date:
02 Dec 2022
DOI:
https://doi.org/10.5089/9798400227769.001
ISBN:
9798400227769
ISSN:
1018-5941
Pages:
33
Keywords:
Western Balkan; labor taxation; labor tax wedge; personal income tax; corporate income tax; social security contributions; income taxation; SSC reduction; employer SSCs; Labor taxes; Tax wedge; Wages; Labor markets; Europe
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This paper examines how labor taxation (personal income taxes and social security contributions) in the Western Balkan contributes to labor market outcomes such as high informality and a significant gender gap in participation rates. We find that limited progressivity combined with high tax wedge on low incomes poses a major twin equity-efficiency challenge in the region, resulting in low redistributive capacity and inadequate incentives to enter the job market. Policy implications are discussed with a view to alleviating the excessively high tax wedges on low incomes, while improving progressivity of income taxation.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund