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In the last decade, the two inequalities have gained the main place among global economic problems, so in Serbia there are more and more discussions about how much inequality is, but also what causes it and how it could be reduced.
Photo: Media CenterIt goes without saying that opinions are divided, from what data sources should be used to calculate inequalities to what are the causes and consequently what are the measures.
SANU and the Faculty of Economics today organized the symposium “Inequality in Serbia (Part Two)” as a continuation of a similar symposium held two years ago.
At that time, one of the conclusions was that the tax system, as well as the social and pension systems affect the increase in income inequality in relation to European countries, that is, inequality before taxes is lower in relative to the EU average than when taxes and contributions are deducted.
Nikola Altiparmakov, a member of the Tax Council, today presented quite different conclusions comparing the tax systems of Serbia, which according to the Silk Survey of 2018 ranked third in terms of inequality in Europe and Slovakia, which is the country with the lowest inequality in Europe . the country reaches 15 points.
Altiparmakov claims that the tax system is not “guilty” of such a large deviation in inequality, but inequality is high even before taxes.
“Both Serbia and Slovakia have the so-called single tax system. The causes of inequality can be high market income inequality, that is, before the payment of taxes and social benefits, and the lack of the rule of law and the tendency towards a rentier economy are responsible for that, and that is something Branko Milanović says. Another cause may be inadequate social and fiscal policy. However, Eurostat does not publish data on the Gini market index (an index that measures inequality ), so some alternative sources were used in the analyzes. However, Eurostat provides data on pensions and, according to them, pensions in Serbia have a much greater impact on reducing inequality than in the EU, “he said. Altiparmakov.
According to their analysis, if the Slovak tax system were applied to Serbia, the equality would be reduced by 1.3 points, and together with the pension system and social benefits, the reduction would be below one point, which does not explain a such a large difference in inequality between the two countries. .
“There is room to increase income redistribution through censuses or higher non-taxable deductions for dependent household members, but the proposed synthetic tax was in effect 50 years ago in Europe and only four or five countries have maintained it to date,” Altiparmakov concluded.
Another aspect of estimating income inequality is what is used as the data source.
Gordana Matković, from the Center for Social Policy, points out that it is characteristic of Serbia that the first decile, that is, the 10 percent of the poorest, has a 3.5 times lower share of the total income of society than the average of the EU, and twice less than the next first country, Romania.
“According to the SILC survey, an individual in the first decile has 2,700 dinars a month and a family of three has 4,700 dinars. The question is whether this is a realistic indicator and if the income of the poorest is well measured. Compared to the In the Household Budget Survey, it turns out that consumption is four times higher than the disposable household income. This is an unusually large deviation, “said Matkovic, adding that SILC is not a single survey but rather a framework to standardize the data and that countries of the EU obtain data from various sources.
Matković sees a big difference between consumption and income in negative income, ie. Polls show people who show they had a year-level loss.
Furthermore, she does not record income in kind, that is, if the household produces food for itself, and in the end, according to her, social benefits are underestimated in Serbia.
He estimates that if only the extreme and negative Gini values were removed, the coefficient would decrease from 1.5 to two points.
Additionally, the SILC survey data shows that 35% of households have no income.
“The question is what they live on.” I think there are many who do not report income in kind, “he estimates.
However, research by Milojko Arsic, a professor at the Serbian Faculty of Economics, shows that progressive taxes and greater redistribution, and especially state investment in education and health, reduce inequality.
“However, excessive fiscal escalation can negatively affect savings, investments and innovations, which then limit economic growth. We also have examples where increasing inequality is accompanied by a reduction in poverty, as in China. Therefore, in addition to inequality, it is also important to monitor poverty.
In the end, the inequality that is talked about much less, and that is much greater, is property inequality. This is mainly due to the paucity of data and poor tracking of household assets.
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