| Abstract [eng] |
Taxation of Labour And Capital in Lithuania and Other Eu Countries: Impact on Competitivity and Employment. The purpose of this work is to present how labor and capital taxation in Lithuania and other EU countries affect the country's competitiveness and employment. This study was based on country statistics and publications on economic and social issues. This study is conducted in two parts, each of them has three stages. The first part of the paper analyzes the impact of labor taxation on employment in the country. In the first stage of this part, statistics are collected in Lithuania and other EU countries. In the second stage the analysis of changes in employment rates is performed, data grouping, comparative analysis and graphical representation are performed. The third stage is the assessment of the dependence factors determining employment. The second part of the paper analyzes the impact of capital taxation on the country's competitiveness. This analysis is also carried out in three steps. The first stage identifies the tendency of the competitiveness index and analyzes tis sub-indices. The second stage examines the determinants of competitiveness. Gross domestic product of Lithuania and other EU countries, foreign direct investment, export and import are analyzed. In the third stage, a comparative analysis, a correlation-regression analysis between the dependent variable income tax and the independent variables gross domestic product, foreign direct investment exports and imports, is carried out. Pearson's correlation coefficient is used to estimate this relationship between variables. An analysis of the trend of population employment shows that employment is increasing every year. However, it is not just taxation on labor or capital that affects this. There is a weak correlation between wage taxation and population employment, which we can say is small, but has an impact on population employment. The taxation of capital does not affect the employment of the population, as the employment of capital remains unchanged, and according to the analysis carried out, it is growing, therefore we cannot say that it is one of the main reasons for the increase of the unemployment. An evaluation of the dependency of the overall competitiveness index (without its sub-indices) and the profit tax collection shows that in half of the analyzed countries this relationship is very strong. In some countries the correlation is strong, for these reasons we can say that the dependent variable income tax collection is influenced by the overall competitiveness of the country. An analysis of the competitiveness indicator shows that it is steadily increasing in most countries. The growth of the competitiveness index was influenced by the growth of its sub-indices, such as gross domestic product, exports and imports of foreign direct investment. Correlation analysis shows that there is a strong correlation between competitiveness index sub-indices and income tax collection, which means that as one of the sub-indices increases, the amount of income tax collected by the country also increases. As a result of this work, it is possible to propose to the government to reduce wage taxes such as personal income tax and social security taxes. Reducing these taxes would allow citizens to earn more money for their work and to be interested in being employed, thus reducing the black economy in the country, as it would not be useful for employers to risk and hide recruitment at low taxes. Because high taxes on businesses are financially burdensome, reducing them would reduce the black economy and reduce unemployment. The tax cuts would not reduce the tax revenue of the government but would also increase it by reducing the black economy, illegally employed workers would be legalized and they would also pay taxes to the government. |
