Diversion of Personal Income Tax Credits for the Professional Growth of Human Capital
13th International Scientific Conference „Business and Management 2023“ 2023
Māris Jurušs, Baiba Šmite-Roķe, Arīna Galilejeva

Productivity is one of the main factors for economic growth and competitiveness and is widely used in national performance assessments and international comparisons. Human capital is one of the most important factors in increasing productivity. Investment in human capital is needed to increase productivity. From the government side, this can be achieved through tax policy, which include not only personal income taxes, but also tax rebates and refunds, as well as tax credits. To find the most efficient action model, it is necessary to find a tool to assess the impact of tax initiatives on productivity. The aim of this study is to assess whether and how tax policy could further improve productivity, particularly by development of human capital. The study’s authors used multiple non-linear regression method to evaluate impact of tax initiatives to labour productivity. The objective of the study is to assess the impact of taxes on productivity and possible tax credits or other more optimal tax solutions, to assess the potential personal income tax initiatives for professional growth. The study’s findings indicate that personal income tax rebates should be modified more economically than socially to encourage the professional development of human capital and increase labour productivity. The results for the Baltic States indicate that by granting a tax credit and lowering taxes by one percent, productivity might increase by two to three percent, while in countries with higher initial productivity levels, the impact is significantly smaller or even neutral.


Keywords
human capital, labour productivity, personal income tax, tax credits.
DOI
10.3846/bm.2023.1031
Hyperlink
http://bm.vgtu.lt/index.php/verslas/2023/paper/view/1031

Jurušs, M., Šmite-Roķe, B., Galilejeva, A. Diversion of Personal Income Tax Credits for the Professional Growth of Human Capital. In: 13th International Scientific Conference „Business and Management 2023“, Lithuania, Vilnius, 11-12 May, 2023. Vilnius: Vilnius Gediminas Technical University Press, 2023, pp.335-342. ISSN 2029-4441. e-ISSN 2029-929X. Available from: doi:10.3846/bm.2023.1031

Publication language
English (en)
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