Tax Benefits of the Income Tax Systems of the Baltic States: Comparison and Assessment
16th International Multi-Conference on Complexity, Informatics and Cybernetics (IMCIC 2025): Proceedings of World Multi-Conference on Systemics, Cybernetics and Informatics, WMSCI 2025
Ilze Sproģe, Nataļja Lāce, Aina Joppe

The tax systems of the Baltic States—Latvia, Lithuania, and Estonia—each offer distinctive approaches to personal income tax (PIT) relief, balancing economic and social priorities in different ways. Latvia and Lithuania utilize progressive tax systems aimed at reducing income inequality through targeted allowances, while Estonia's flat tax structure emphasizes simplicity and economic efficiency. This article compares and evaluates the PIT relief systems in these countries, examining their theoretical foundations, practical applications, and socio-economic impacts from 2000 to 2024. The analysis employs theoretical frameworks, case studies, microsimulation models, and cost-benefit and statistical evaluations. The findings reveal that while progressive systems effectively mitigate inequality, they introduce administrative complexity. In contrast, Estonia’s flat-rate system encourages investment and economic activity but falls short of addressing redistributive goals. This comparative analysis highlights the trade-offs inherent in PIT systems and offers insights into optimizing tax policies for balanced economic growth and social equity.


Keywords
Personal income tax, tax benefits, Baltic states
DOI
10.54808/IMCIC2025.01.216
Hyperlink
https://www.iiis.org/DOI2025/ZA642CR/

Sproģe, I., Lāce, N., Joppe, A. Tax Benefits of the Income Tax Systems of the Baltic States: Comparison and Assessment. In: 16th International Multi-Conference on Complexity, Informatics and Cybernetics (IMCIC 2025): Proceedings of World Multi-Conference on Systemics, Cybernetics and Informatics, WMSCI, United States of America, Orlando, 25-28 March, 2025. Winter Garden: International Institute of Informatics and Systemics (IIIS), 2025, pp.216-220. ISBN 978-1-950492-84-8. ISSN 2771-5914. Available from: doi:10.54808/IMCIC2025.01.216

Publication language
English (en)
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