MAIN APPROACHES TO TAXATION POLICY FORMATION

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MAIN APPROACHES TO TAXATION POLICY FORMATION

Journal Title: Profesinės Studijos: Teorija ir Praktika - Year 2010, Vol 7, Issue 7

Abstract

It should be noted finally, that the following conclusions could be drawn. The research has proved that the taxation rate increase in separate kinds of taxes during the period of economic slowdown will not fill in the budget; on the contrary, such line of policy will result in budget reduction; thus confirming the point that the amount of the tax receipts depends not so much on the overall value of tax bites, but rather on the value of the profits tax base. Payments into the budget are shrinking on account of declining business activity, the fund moved outside the national economy and into the shadow economy sectors, as well as on account of tax evasion. Restrictive measures proved ineffective as a solution for the problem of filling the budget, but eventually and unavoidably resulted in manifold increase of the amount of external borrowings in order to meet at least the minimum liabilities of the state management. The upsurge of the state debt has achieved during the period under consideration the limits set by the Treaty of Maastricht, which is combined with acute curtailment of budgetary funding for all the social programs as the interest payments for the foreign transfers exceed the amounts of state funding for education and science, medicine, and culture. The taxes designated for the local governments do not fulfill their regulatory and promotional functions, which is evidenced by regular drawing on the Cohesion Fund, as 87% of all the Latvian local governments draw on the latter to ensure their minimum survival.

Authors and Affiliations

Галина Решина

Keywords

EP ID EP85321
DOI -
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