Impact Factor:
ISRA
(India) =
6.317
ISI
(Dubai, UAE) =
1.582
GIF
(Australia) =
0.564
JIF = 1.500
SIS
(USA) =
0.912
РИНЦ
(Russia) =
3.939
ESJI
(KZ) =
8.771
SJIF
(Morocco)
= 7.184
ICV
(Poland)
= 6.630
PIF
(India)
= 1.940
IBI
(India)
= 4.260
OAJI
(USA)
= 0.350
Philadelphia, USA
252
Issue
Article
SOI:
DOI:
International Scientific Journal
Theoretical & Applied Science
p-ISSN:
2308-4944 (print)
e-ISSN:
2409-0085 (online)
Year:
2022
Issue:
06
Volume:
110
Published:
16.06.2022
Shavkat Shukhratovich Turaev
Academy of Public Administration under the President of the Republic of Uzbekistan
Head of Department
TAX BUDGET AND ITS CALCULATION PROBLEMS IN THE
ECONOMY
Abstract: This article is a scientific and theoretical study of the tax burden in the economy and the problems of
its calculation, in which the need to calculate the tax burden in the national economy, the distribution of the tax
burden in the economy, the distribution of the tax burden among taxpayers. Also, the calculation directions of the tax
burden are studied on legal entities and individuals.
Key words:
tax system, tax burden, gross domestic product, taxpayers.
Language: English
Citation
:
Turaev, Sh. Sh. (2022). Tax budget and its calculation problems in the economy.
ISJ Theoretical &
Applied Science, 06 (110),
252-255.
Soi
http://s-o-i.org/1.1/TAS-06-110-41
Doi
:
https://dx.doi.org/10.15863/TAS
Scopus ASCC: 2000.
Introduction
Among the problems of the tax system, the
problem of the tax burden is central. It reflects the
final assessment of the tax policy and system of a
particular state, is an outcome indicator of the
country's tax reform and plays an important role in the
economy. A rational tax system that meets the needs
of the state for financial resources does not negatively
affect the production and entrepreneurial activities of
taxpayers, but rather has a positive impact on finding
effective ways of doing business.
Urgency
Therefore, the taxpayer’s tax burden indicator
will be sufficient to assess the quality of the country’s
tax system. The tax burden represents a set of
indicators of the country's tax system. A certain
percentage of the income of individual business
entities or other taxpayers is paid to the state in the
form of taxes or fees.
Research methodology
A.Smith, who lived and worked in the XVIII
century, in his book "Study of the nature of peoples
and the causes of enrichment" paid special attention to
the relationship between the level of the tax burden
and the state budget. “The state benefits more from
reducing the tax burden than from imposing hard-to-
collect taxes. The remaining funds may remain as
additional income to be paid to the treasury in the
future. At the same time, the additional costs of the
state related to penalties and mandatory payments will
be reduced, and taxpayers will be able to make these
payments more easily [1].
For more than two hundred years, financial
science has been studying the impact of taxes on the
income of the population and the economy. So far,
scientists are trying to determine the basicity of the
level of taxation and the issue of determining the
indicator of the tax burden.
In the XVIII-XIX centuries, foreign scholars
analyzed the proportion between the budget and
national income, the size of taxes on businesses and
citizens. The tax burden and its impact on the
economy were first mentioned in the 18th century. In
this regard, F. Justi studied the tax burden at the macro
level at the link between the budget and the national
income of the state. At the same time, he argued that
the country's budget should be 1/6 of national income.
K. Gok justified the proportions between state
budget expenditures and revenues and national
income. He believed that a tax burden that was real for
a particular country, justified at different stages of
economic development, could not be a single,
universal and at the same time optimal indicator [3].
Impact Factor:
ISRA
(India) =
6.317
ISI
(Dubai, UAE) =
1.582
GIF
(Australia) =
0.564
JIF = 1.500
SIS
(USA) =
0.912
РИНЦ
(Russia) =
3.939
ESJI
(KZ) =
8.771
SJIF
(Morocco)
= 7.184
ICV
(Poland)
= 6.630
PIF
(India)
= 1.940
IBI
(India)
= 4.260
OAJI
(USA)
= 0.350
Philadelphia, USA
253
Based on the above considerations, we can say
that it is not possible to accurately and optimally
determine the tax burden indicator for the same
country or taxpayers, it can only be determined
empirically. Because there is no other way to
determine. There is no single methodology for
specifying the tax burden for a particular country.
The amount of reparations after World War I
necessitated the development of precise methods of
measuring the weight of the tax burden to pay off
Allied debts. The purpose of these methods was to
provide a basis for further study of the weight of the
tax burden on the economy as a whole, at the
intersections of particular social groups of the
population, and within production sectors.
Theoretical approches
The interest in the tax burden in the economy,
both theoretically and practically, is not in vain. We
can justify the necessity and importance of calculating
the tax burden for the country as follows:
First, the calculation and determination of the tax
burden is necessary for each state to develop its tax
policy. By abolishing old taxes and introducing new
taxes, setting tax rates and tax incentives, the state will
not allow pressure on the economy. From a
macroeconomic point of view, the state is used to
determine the revenue side of the budget, the tax base
and the impact of taxes on the economy through the
tax burden.
Second, the tax burden indicator is needed for a
comparative analysis of the state with the tax burden
and tax indicators of other different states. It is
necessary for the location of production in the country,
the distribution of investment and the movement of
capital. This data is also used for comparative analysis
both within the country and across regions.
Analytical part
A gradual change in taxation will make it
possible to determine an important factor - the tax
burden for different periods.
The tax burden is an overall indicator of the role
that taxes play in society. In many countries, the tax
burden at the macroeconomic level is calculated
relative to the total amount of taxes and levies relative
to GDP [5].
The role of taxes in the life of the state and
society depends on geographical and climatic factors.
Because the factors affect the development of the
national economy and the state has the ability to
differentiate and compare the economy.
As a result, the state determines the tax burden
and returns these funds to taxpayers through various
services. We can see this more clearly in the diagram
below.
Paying attention to the basics of taxation,
elaborating it carefully, correctly determining the
terms and amount of payment leads to the
establishment of a fair tax burden.
Fourth, the indicators of the tax burden are used
to determine the economic activity of economic
entities. It is this indicator that determines the
direction of investment in production. The tax burden
is a great help in addressing issues such as the
development and reduction of production, regulation
of the economy, solving production problems by
industry, creating new jobs, normalization of
consumption and savings processes of economic
entities, investment orientation.
In theory, the determination of the tax burden in
the economy is carried out in two directions. That is,
it is defined at the macro and micro levels.
At the macro level, we can divide the tax burden
into two, that is, the tax burden on the whole economy
and the population as a whole. This figure is general
and is defined as the share of taxes and fees in relation
to GDP, as mentioned above. Macro-level refers to the
tax system of the whole country, in other words, it
means the state's intervention in the economy, its tax
pressure. In this case, the tax burden is distributed to
enterprises, industries and sectors. Also, the macro-
level tax burden on legal entities and individuals is
insignificant. Because they pay taxes and fees to the
budget and extra-budgetary funds from their own
income.
The tax burden on the general population is
calculated as the ratio of all taxes collected by the
population to GDP. The world experience shows the
tax burden on the population again at the micro and
macro levels. The micro level is the tax payment of
one person, the macro level is the tax payment of the
general population. It is important that each family
calculates the tax burden as a tax subject. The tax
burden on the population represents all taxes levied
per capita.
In the study, we also found it necessary to dwell
on the tax burden on the population of the country.
This is because the tax burden in the country is paid
by two entities, namely a legal entity and an
individual. The experience of developed countries
shows that the bulk of the tax burden falls on
individuals.
When analyzing the structure of state budget
revenues in the developed countries of the world, the
main taxes in the GDP, ie income taxes, play a key
role. The share of indirect taxes is low. In the Republic
of Uzbekistan, we can see the opposite. This is
because in the context of the transition to market
relations, indirect taxes perform a more fiscal
function, and this is necessary for the state. This view
is also valid from the point of view of manufacturers.
However, the bulk of the tax burden is falling on the
population. Because the final consumers of products
(works, services) are individuals. The real payer of
indirect taxes is also a consumer of goods (works,
services). From this we can say that individuals also
Impact Factor:
ISRA
(India) =
6.317
ISI
(Dubai, UAE) =
1.582
GIF
(Australia) =
0.564
JIF = 1.500
SIS
(USA) =
0.912
РИНЦ
(Russia) =
3.939
ESJI
(KZ) =
8.771
SJIF
(Morocco)
= 7.184
ICV
(Poland)
= 6.630
PIF
(India)
= 1.940
IBI
(India)
= 4.260
OAJI
(USA)
= 0.350
Philadelphia, USA
254
pay taxes and indirect taxes that they pay. There are
also some types of taxes paid by legal entities that are
included in the cost of the product. Taxes included in
the cost of production are also borne by individuals.
Therefore, these indicators should be taken into
account when calculating the tax burden on
individuals.
When we take the sum of indirect taxes, taxes
paid by individuals, property and land taxes included
by legal entities in products (works, services) from the
indicators of state budget revenues, we can see the
total tax burden on individuals or how much they form
budget revenues.
If we analyze the tax burden on the population
more precisely, if we divide all the taxes paid by
individuals by the average annual number of the
population, we get the amount of tax per capita. This
determines the average tax amount per person. In the
economic literature, GDP per capita is an indicator.
Taxes allocate a certain part of GDP to the budget. So,
there is an integral connection between these two
economic categories.
The assessment of the tax burden on the
population should be based on the sum of all taxes
paid by the population. The complexity of the
calculation based on the above formula is that it is
difficult to determine the amount of tax paid directly
and indirectly by the population. In this sense, the
population is the main consumer and therefore bears
the main tax burden.
The tax burden on the employee (wage earner)
consists of income tax. This indicator is used to
analyze the income tax burden in different countries.
This figure is higher in developed countries. This tax
alone accounts for more than 45 percent of the U.S.
federal budget.
One of the problems in determining the tax
burden for legal entities is that while some economists
calculate all the taxes and levies paid by a legal entity
in relation to value added, others calculate it in
relation to the net income from product sales. No
definite decision has yet been made on this.
The tax burden on legal entities is determined by
their income. According to him, the tax burden is
calculated based on sales of products. Based on this
indicator, income tax is determined. Also, sales profits
are not always a source of taxation. Therefore, some
taxes of the legal entity will not have an impact on this
indicator.
Each type of tax has its own evaluation criteria,
regardless of its source. The most important thing is
the profit of the enterprise. That is, taxes and fees paid
by a legal entity are defined as the effect on the profit
margin or their share. In addition, the payments of
legal entities are determined in relation to its net
profit.
Many economic literatures argue that the rate of
profit or net profit cannot accurately reflect the tax
burden of legal entities. We do not think that the above
formula accurately represents the tax burden of a legal
entity. The above formula determines how taxes affect
the legal entity’s profit and net profit ratios. This is
just one aspect of the formulas that express the tax
burden on a legal entity and the impact of taxes on it.
Another way to determine the tax burden on
businesses is to set it against value added. Value added
is the value created by a legal entity over a period of
time. That is, a legal entity buys a commodity or raw
material at a certain price and adds value to it during
its processing. This is a value created during this
period. This figure is the source of all taxes. If a legal
entity does not create value added, it is not considered
a taxpayer (other than property and land taxes) and
cannot create a taxable source. The value added tax
indicator, calculated on the basis of value added, more
broadly reflects the tax burden of a legal entity.
Value added includes depreciation allowances,
wages, social security contributions, curves and other
taxes, as well as profits. Therefore, the calculation of
the tax burden under this method is more complicated.
Experience in applying these methods of
calculating the tax burden shows that none of them can
be the most optimal option for calculating the tax
burden. Only a cross-comparison of the various
indicators is close to determining the relative tax
burden.
At the same time, tax theory recommends that
direct taxes be between the buyer and the consumer,
regardless of the nature of the product. Therefore, it is
not possible to determine a universal tax burden for
businesses.
Each of the methods of calculating the tax
burden in today's practice has its advantages and
disadvantages. Therefore, none of them can guarantee
the establishment of an absolute tax burden in sectors
of the economy.
Also, the sectors of the economy have their own
production characteristics, such as labor productivity,
material base, capital turnover, product seasonality.
These factors also do not allow the determination of a
single universal tax burden.
World experience shows that as a result of
increasing the tax burden on taxpayers (increasing the
tax burden and raising tax rates, removing tax
benefits, etc.), tax revenues initially increase, and after
reaching a maximum, these figures begin to decline.
As a result, budget revenues are declining and a
certain proportion of taxpayers are in decline or
production is declining, while the rest of the taxpayers
are illegally evading taxes. The result is a shadow
economy.
Nowadays, when making changes to the tax
legislation, many states are on the way to removing
benefits and deductions, trying to introduce new fees.
However, this leads to a sharp decline in income and
taxable capital.
The world experience of taxation shows that
taking more taxpayers ’income as a tax leads to a
Impact Factor:
ISRA
(India) =
6.317
ISI
(Dubai, UAE) =
1.582
GIF
(Australia) =
0.564
JIF = 1.500
SIS
(USA) =
0.912
РИНЦ
(Russia) =
3.939
ESJI
(KZ) =
8.771
SJIF
(Morocco)
= 7.184
ICV
(Poland)
= 6.630
PIF
(India)
= 1.940
IBI
(India)
= 4.260
OAJI
(USA)
= 0.350
Philadelphia, USA
255
decrease in investment in the economy. If the tax rate
reaches 40 percent of income, it will have a negative
impact on business development and production
expansion.
In other words, an effective tax system should
meet the needs of the state by receiving 1/3 of the
revenues. At the same time, the exact indicator of the
tax burden is manifested differently in different
countries at the macro and micro levels. First of all,
we are talking about the obligations between the state
and taxpayers. The level of the tax burden depends on
the provision of medical, educational, communal and
other services to the population of the state, budget
expenditures. In Sweden, for example, the population
donates 50 percent of their income to the state
treasury, and this does not negatively affect
production efficiency. This is not surprising, as the
state has been extensively protecting taxpayers
economically and socially.
After all, the tax burden should not harm the
activities of a particular taxpayer. Therefore, the state
should use averages in determining the tax burden.
Of course, each country determines the tax
burden based on its different national characteristics
and production. There are tens of thousands of
operating enterprises with different characteristics in
each country. Each of them has different options in
paying taxes. Therefore, in the comparative analysis
of the tax burden at the state level and in the
calculation of the tax burden at the macro level, it is
expedient to calculate the ratio of taxes and fees to
GDP.
Conclusion
In conclusion, tax burden indicators are a key
factor in the development of tax, investment and social
policy of the state. Including:
- The tax burden on the country's economy is the
result of state tax policy and represents a qualitative
characteristic of any tax system. At the same time, the
level of taxes levied is determined, on the one hand,
by the efficiency of social production, and, on the
other hand, by the amount of the state's need for
financial resources. Therefore, reducing the weight of
the tax burden is primarily related to reducing
government spending;
- The state in the development of its social policy
is based on the indicator of the tax burden, which
serves as the main source for it;
- The results of the study show that there is no
single methodology for calculating the tax burden on
businesses. It should be based on several methods to
calculate and analyze it.
References:
1.
Smith, A. (1776).
An Inquiry into the Nature and
Causes of the Wealth of Nations.
Publication
date:
9
March
1776.
Retrieved
from
2.
Solovej,
G.G.
(1928).
Gosudarstvennye
budzhety
. (p.5). M, L..
3.
Panskov, V.G. (2006).
Nalogi i nalogovaja
sistema Rossijskoj Federacii:
Uchebnik. (p.464,
93). Moscow: Finansy i statistika.
4.
(2004).
Nalogi i nalogooblazhenie.
Pod red.
B.H.Alieva. (p.85). Moscow: Finansy i statistiki.
5.
(1991).
Antologija jekonomicheskoj klassiki
. I 2-
h tomah. T.Ӏ. (V.Petti, A.Smit, D.Rikardo) /Pred.
I.A.Stoljarova. (p.475). Moscow.
6.
Laffer, A. (2004). The Laffer Curve: Past,
Present, and Future.
The Heritage Foundation,
1
June, No.1765.
7.
Jaҳjoev, K. (2003).
Solikka tortish nazarijasi va
amalijoti
.
(p.20).
Tashkent:
Fan
va
tehnologijalar nashrijoti.
8.
Atkinson, A.B., & Stiglitz, J.E. (1967). The
design of tax structure: Direct versus indirect
taxation.
Journal of Public Economics,
6 (1967):
55-75.
9.
Panskov, V.G. (1998). Nalogovoe bremja v
Rossiskoj nalogovoj sistema.
Finansy
, №11: p.
20.
10.
Kejns, Dzh.M. (2002).
Obshhaja teorija
zanjatosti, procenta i deneg
. (p.352). Mu:
«Gelios ARV».
