THE REDISTRIBUTIVE EFFECTS OF PERSONAL TAXES AND SOCIAL BENEFITS IN THE REPUBLIC OF SERBIA

Abstract

In this paper we measure the influence of the instruments of Serbia’s fiscal system - personal taxes (personal income tax and social security contributions) and social benefits (means tested and nonmeans tested) - on income redistribution, using the latest data from the Household Budget Survey 2012. We analyse the redistributive effects of the fiscal system for the year 2013 and of the fiscal system that has been functioning since 1st January 2014. We find that the redistributive effect reduces income inequality by about 50% in both observed years. Social benefits create 98% of vertical redistribution (2013), whereas personal taxes initiate 2% (2013). State pensions, means-tested social benefits, and social security contributions are most important in reducing inequality in Serbia (2013). The partial fiscal reform (2014) has not changed the rank of the focused fiscal instruments.