Tax on interest for individuals’ deposits and its impact on tax burden distribution in Ukraine

Economic Annals-XXI: Volume 132, Issue 7-8(2), Pages: 53-56

Citation information:
Kondratenko, M. (2013). Tax on interest for individuals’ deposits and its impact on tax burden distribution in Ukraine. Economic Annals-XXI, 7-8(2), 53-56. https://ea21journal.world/index.php/ea-v132-15/

Myroslava Kondratenko
Lecturer,
Kyiv National Economic University named after Vadym Hetman
54/1 Prospect Peremogy, Kyiv, 03680, Ukraine
kondratenko_mb@ukr.net

Tax on interest for individuals’ deposits and its impact on tax burden distribution in Ukraine

Abstract. The author analyses the advisability of introducing tax on interest for individuals’ deposit accounts in Ukraine. It is proven that the suggested tax will compensate for budget losses caused by tax evasion. The author proposes differentiated tax rates in accordance with individuals’ income. Basic tax rate on interest on deposits should not be lower than the basic tax rate on income received in the form of wages. As long as income is not equal for everyone, it is proposed to exempt minor deposits from taxation. In addition, the annual establishment of non-taxable amount on deposit should be done in accordance with the growth rate of personal income and the stability of banking system. This will compensate individuals’ financial risks and stimulate savings on bank deposits. Also the author justifies the necessity of increasing taxes on unearned income of wealthier segments of the population.

Keywords: Income; Savings; Tax on Interest Income; Deposit Accounts; Tax Burden

JEL Classification: H23; H24; H27

Reference

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Received 04.06.2013