ИМОВИНСKА НЕЈЕДНАKОСТ И ПОРЕСKА ПОЛИТИKА
WEALTH INEQUALITY AND TAX POLICY

Summary/Abstract: Nowadays wealth inequality in Europe and beyond is very high, i.e. twofold higher than income inequality – Gini coefficient on household wealth in 2018 stood at 64. Similar situation is in Serbia, where wealth inequality, measured using Gini coefficient (54) is by 60% higher than income inequality. Although wealth inequality in Serbia is close to the Central and Eastern Europe (CEE) average, the fact that it is substantially higher than income inequality, makes the question on reduction in wealth inequality by means of tax policy instruments relevant. In modern tax systems, including Serbian, wealth is mostly taxed by means of recurring and selective real estate tax and inheritance and gifts tax, with exemption granted for large chunk of wealth, which dampens redistributive effects of these taxes. Considering the current characteristics and redistributive goals, parametric reform of property taxation in Serbia is needed. It should entail introduction of unlimited tax jurisdiction, affirmation of tax allowances for the first home, introduction of global progressivity and deductions for housing loans, is considered more adequate. On the top of that, the system of taxes on ownership, use and hold of (luxury) goods should be reformed, so as to make the tax liability linked to the value of goods, which would imply wider scope of wealth taxation. Progressive reform of inheritance and gifts tax could entail abolishing general exemption for close relatives and introduction of non-taxable threshold, equal to present value of life-time average earnings, as well as rise in the tax rates, to reach the CEE average and in the long run also to get closer to the European average.

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