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TAX BURDEN IN ALBANIA, KOSOVO and WESTERN BALKANS 2020

The development of fiscal policies in function of economic and social models depends on the correctness of the policy, as a reflection of the economic and social environment. In the Western Balkan region, as in the rest of the world, government budgets need to be supported by tax systems that promote the increase of incomes per capita by stimulating economic competition.

The growth rate of the economy in 2019 depended mainly on the slow pace of addressing and removing barriers that have dragged for decades development with full potential of the private sector. Meanwhile, the institutions that are engaged in enabling the preservation of a business-friendly environment have reached a level of minimal regulation, which, if follows, increases the pace of implementation of comprehensive structural, economic and social reforms. An important goal to be implemented is related to the future improvement of the economic and social climate for better conditions adapted to EU standards.

The measurement and presentation of the tax burden as well as the presentation of the Tax Freedom Day Index are in the eighth edition of their publication on the Albanian economic and political environment and beyond. The fiscal and economic study presented on the results of the methodology used by the experts and partners of the ALTAX Center for the calculation of Tax Freedom Day, 2020 has become a reference for researchers, journalists and students and aims to create a model in the Albanian economic and political environment.

The publication of the fiscal burden shows the effect, in what how a good / bad tax policy fulfills one of the primary goals, increasing revenue while maintaining the equality of taxpayers for the burden they should bear. On the other hand, the policy should aim at the effect that equality falls on the distribution of the burden that taxpayers should bear according to their ability to pay.

Through the measurement of the fiscal burden we aim to analyze the effects of the taxation system on the distribution of economic well-being in Albania, Kosovo and the Western Balkans. The study is conducted to show the level of fiscal burden for Albanian regions, commenting on the opportunities that fiscal policies should be analyzed and administration in increasing revenues by comparing with similar regions. Its presentation is seen in terms of financing local and central investment spending and increasing the well-being of citizens, not forgetting that fiscal policy through the burden decides on the redistribution of income.

On the other hand, given the fact that every citizen is a contributor to the state budget by paying a tax in a direct or indirect form, then it is interesting for everyone to know how much fiscal burden they bear in relation to citizens in other regions of Albania, Kosovo as well as in other Balkan countries.

The ranking of regions within Albania and Kosovo, as well as in countries within the Western Balkans region, according to the fiscal burden gives the business the opportunity to examine the effectiveness of government policies and initiatives for economic development, and may affect the moment of analysis for the allocation of public spending in the context of transparency of public finances.

This analysis, according to the administrative areas, serves to see which group or geographical area is the most charged, and on the other hand a more detailed analysis orients the policy to see which industry or area should have a different burden from what results from the research.

The object of data comparison is the income taxes paid on behalf of the state budget by residents and non-residents. Taxes and customs duties included in this analysis are taxes administered by the central tax administration (including social security contributions), taxes and fees administered by local tax administrations, and customs duties, all them calculated according to the region where they are collected.

The results of this study are based on the income generated by residents by residence where they are, without excluding tax revenues from large taxpayers of the country and the capital (included according to the address of residence), which meet close to 3 / 4 of the total total tax revenue for both levels of tax administration.

Statistical data for regions are the subject of analysis, according to the comparison of budget program data, level of implementation and various sources.

The structure of this document consists of five parts.

The first part is a presentation of statistical and macroeconomic data for the Western Balkans, as well as analysis of tax rates and their role, the effect of the burden on foreign investment, and the role of Double Taxation Agreements.

The second part is the fiscal burden in the Western Balkans and the distribution of the burden according to the destination of spending in all 6 countries.

In the third part is an analysis and commentary of the fiscal burden in Albania in 2019 and the ranking of regions and municipalities, according respectively to the level of fiscal burden and local tax burden per capita.

The fourth part is an analysis of the fiscal burden in Kosovo in 2019 and the ranking of regions and municipalities, according respectively to the level of fiscal burden and local tax burden per capita.

The fifth part, respectively explains the methodology of calculating the Tax Freedom Index and presents the Calendar of the Day of Tax Freedom of the Western Balkans, and specifically of Albania and Kosovo together with the comments of regions according to the ranking.

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