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Transition to the Progressive Scale of Individual Income Tax in Kazakhstan: Opportunities and Limitations

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Studies on Russian Economic Development Aims and scope

Abstract

The article explores the possibilities and limitations for transition to a progressive scale of personal income tax in Kazakhstan (individual income tax). It is assumed that the optimal progressive scale should be selected based on the balance of interests of the state and employees. During the study of the wage sector, its main characteristics were identified: a high level of differentiation and “gaps” in wage levels, a significant share of low-paid workers (“working poor”), a high gap between the minimum wage (MW), median and mode from the average monthly wage value. These features create limitations when deciding on the possibility of transition to a progressive scale of individual income tax in Kazakhstan. A number of new potential risks have been identified: a reduction in local budget revenues in regions with low wages, tax evasion, and an increase in additional costs for new tax administration. Statistical calculations were carried out to develop possible income tax scales with different tax rates.

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Funding

The study was carried with grant financing from the Ministry of Education and Science of the Republic of Kazakhstan for scientific and (or) scientific and technical projects for 2018–2020 on the topic: “Research and assessment of the effects of the state and government spending on factors of long-term economic growth of Kazakhstan (labor, capital, aggregate factor productivity) using econometric models and a model of intersectoral balance”, IRN AP05132465.

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Authors and Affiliations

  1. Center for Macroeconomic and Applied Economic and Mathematical Research, AO Economic Research Institute, Nur-Sultan, Kazakhstan

    S. N. Alpysbaeva, G. V. Stroeva, Sh. Zh. Shuneev & A. A. Bakdolotov

Authors
  1. S. N. Alpysbaeva
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  2. G. V. Stroeva
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  3. Sh. Zh. Shuneev
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  4. A. A. Bakdolotov
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Corresponding author

Correspondence to S. N. Alpysbaeva.

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The authors declare that they have no conflicts of interest.

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Translated by S. Avodkova

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Alpysbaeva, S.N., Stroeva, G.V., Shuneev, S.Z. et al. Transition to the Progressive Scale of Individual Income Tax in Kazakhstan: Opportunities and Limitations. Stud. Russ. Econ. Dev. 31, 120–127 (2020). https://doi.org/10.1134/S1075700720010025

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