TAX BURDEN OF EMPLOYED PERSONS

Abstract

  Tax burden demonstrates very precisely the scope of fiscal pressure on business and population by the state. In Georgia physical persons are taxed as by direct taxes (income tax is 20%), as indirect taxes. In the end they have much influence on population’s purchasing power.
  More than population’s cash income comes from the salaries, accordingly income tax, VAT and excise could be considered as the tax burden of salaries. According to the calculation by this principle, the salary tax burden in Georgia is 39.2 %. In the last 7 years (In comparison with the year 2012) because of the rapid growth of indirect taxes, the mentioned burden has been increased by 2.7 point.
  To compare the salary tax burden with the European Union countries it is complicated, because since 2008 there is annulled social tax in Georgia, which is paid by employee and employer in Europe. There could be made the comparison if according to the European countries we compare the tax burden value with single workplace, which consists of social taxes paid by salary receivers and employers (contributions).
  Accordingly, what we will compare with Georgian index-the share of direct and indirect taxes in whole salaries, or all tax shares in workplace value, Georgia with tax size will be on leader position (according to the first position) or in outsiders (according to the second position). That means, that in joint list of the EU and Georgia, with the sum of income tax and VAT in comparison with accrued salary, Georgia will be on the second place (39.2%; on the first place is Dania-40.7%) and by the real tax burden of workplace value - on 24th place (On the first place is France-56.7%, on the last place is Cypros-23.4%).