Switching personal income tax and social security contributions between Slovenia and the Federation of Bosnia and Herzegovina

Figures & data

Table 1. Revenues in the FBH and Slovenia in 2011.

Type of tax	Amount collected, 2011 (€ bn)		% total taxes, 2011		% GDP, 2011		Tax per capita, 2011 (€)
	FBH	SLO	FBH	SLO	FBH	SLO	FBH	SLO
PIT	0.13	2.05	4.64	15.6	1.64	5.57	57.18	1,002.10
							(0.75% AGAW)	(5.48% AGAW)
SSC	1.35	5.27	46.69	39.9	16.51	14.28	576.67	2,569.52
							(7.53% AGAW)	(14.04% AGAW)

Note: AGAW represents the national average gross annual wage.

Source: Federation Ministry of Finance (2012); Federal Institute for Development Programming of the FBH (2012); Tax Administration of the FBH (2012); Ministry of Finance of the Republic of Slovenia (2013).

Table 2. PIT and SSC parameters in Slovenia and the FBH in 2011.

Provision	Slovenia	FBH
Tax allowance (as a share of the AGAW)
General	0.1718 if gross income above 0.6539	0.2403 for all taxpayers
	0.2299 if gross income between 0.5653 and 0.6539
	0.3392 if gross income below 0.5653
Children	1st 0.1268	1st 0.1202
	2nd 0.1378	2nd 0.1682
	3rd 0.2299	3rd and each subsequent child 0.2163
	4th 0.3219
	5th 0.4140 + additional 0.0921 for each subsequent child
Dependent spouse	Same as other dependent family members	0.1202
Other dependent family members	0.1268 for any other dependent family member	0.0721 for any other dependent family member
Children with special needs	1st 0.4594 + additional 0.0920 for each subsequent child with special needs	Same as for other children
Disability	0.9187 only for a taxpayer with 100% disability	0.0721 for any level of disability for a taxpayer and any other dependent family member
Allowance for work while student	0.1718	Exempt up to 0.3333
Income of self-employed journalists and artists	15% allowance for the first €25,000 (1.3664 of AGAW) of income	None
Voluntary supplementary pension insurance	Maximum 0.1467 of AGAW or 5.84% of the individual gross wage (whichever is higher)	Maximum 0.1682^a
Life insurance premiums	None	Maximum 0.1682
Medical treatments	None	All costs (unlimited)
Interest for housing loan	None	All costs (unlimited)
Pensions	Tax credit equal to 13.5% of the gross pension	Pensions are not taxed
Standardised costs (as a % of gross income)
Contractual work, royalties, work while student	10%	Contractual work: 20%
		Royalties: 30%
Rents	From property: 40%	From property: 30%
		From property rented to tourists: 50%
PIT and SSC rates (in %)
PIT	Up to 0.4173 of AGAW 16%	10%
	0.4173−0.8346 of AGAW 27%
	Over 0.8346 of AGAW 41%
Employee SSC rate for the employed and self-employed^b	22.1%	31%
Employer SSC rate for the employed and self-employed	16.1%	10.5%
Employee SSC rate applied to contractual work and royalties	None	4%
Employer SSC rate applied to contractual work and royalties	Contractual work: 31%	6%
	Royalties: none

^a In the current Personal Income Tax Act in the FBH, tax allowances for voluntary supplementary pension insurance premiums and life insurance premiums are eliminated.

^b The overall rate of 41.5% (31% + 10.5%) is used for the majority of the self-employed in the FBH.

Source: Personal Income Tax Act in the FBH; Social Security Contributions Act in the FBH; Personal Income Tax Act in Slovenia; Social Security Contributions Act in Slovenia.

Table 3. PIT and SSC parameters that are excluded from the analysis or adjusted.

Provision	Slovenia	FBH
Allowance
Dependent spouse and other dependent family members	Parameter applied for ‘other dependent family members’
Children with special needs	Excluded
Disability (own and dependent family members)	Excluded
Allowance for work while a student	Excluded
Income of self-employed journalists and artists	Excluded
Voluntary supplementary pension insurance	Excluded
Life insurance premiums	Excluded
Medical treatments	Excluded
Interest for housing loan	Excluded
Standardised costs as a % of gross income
Rents		From property rented to tourists: 30% instead of 50%
Excluded: income from capital, pensions, and income from contests and games of chance

Source: Personal Income Tax Act in the FBH; Social Security Contributions Act in the FBH; Personal Income Tax Act in Slovenia; Social Security Contributions Act in Slovenia.

Table 4. Pre-tax income, taxes, and after-tax income (in units of the AGAW).

Category	SLO	FBH	FBH – SLO	SLO – FBH
Pre-tax income	997,538	432,228	997,538	432,228
SSCER	125,703	39,268	78,752	59,467
SSCEE	163,338	114,413	241,495	76,982
TOTSSC	289,041	153,681	320,247	136,449
PIT	108,141	14,408	38,311	45,271
TOTTAX	397,182	168,089	358,558	181,720
After-tax income	600,356	264,139	638,980	250,508

Notes: SLO = Slovenian data and Slovenian parameters; FBH = FBH data and FBH parameters; FBH – SLO = FBH parameters and Slovenian data; SLO – FBH = Slovenian parameters and FBH data; Pre-tax income = Gross income subject to tax + SSCER; SSCER = Employer SSC; SSCEE = Employee SSC; TOTSSC = SSCER + SSCEE; PIT = Personal income tax; TOTTAX = SSCER + SSCEE + PIT; After-tax income = Pre-tax income – SSCER – SSCEE – PIT.

Source: Taxpayers’ Database for the FBH and Administrative Database for Slovenia; authors’ calculations.

Table 5. Average after-tax income by decile groups (in units of the AGAW).

Decile Groups	SLO	FBH	FBH – SLO	SLO – FBH
I	0.0141	0.0357	0.0143	0.0339
II	0.1042	0.1343	0.1053	0.1356
III	0.2724	0.2437	0.2685	0.2539
IV	0.3889	0.3171	0.3680	0.3363
V	0.4562	0.3635	0.4452	0.3884
VI	0.5247	0.4355	0.5254	0.4543
VII	0.6110	0.5619	0.6170	0.5494
VIII	0.7239	0.6948	0.7417	0.6568
IX	0.8959	0.8799	0.9415	0.8238
X	1.5011	1.7220	1.7740	1.4708
Total	0.5492	0.5388	0.5801	0.5104

Notes: SLO = Slovenian data and Slovenian parameters; FBH = FBH data and FBH parameters; FBH – SLO = FBH parameters and Slovenian data; SLO – FBH = Slovenian parameters and FBH data.

Source: Taxpayers’ Database for the FBH and Administrative Database for Slovenia; authors’ calculations.

Table 6. Inequality measures, progressivity measures, and the redistributive effect.

	SLO		FBH		FBH – SLO		SLO – FBH
		% RE		% RE		% RE		% RE
Scenario 1
GX	0.4652		0.4579		0.4652		0.4579
GN	0.4102		0.4478		0.4442		0.4121
RE	0.0550		0.0101		0.0210		0.0458
RE / GX	0.1183		0.0221		0.0451		0.0100
DN	0.4075		0.4460		0.4409		0.4097
DT	0.5524		0.4768		0.5086		0.5245
P	0.0872		0.0188		0.0434		0.0666
t	0.3982		0.3881		0.3594		0.4204
VK	0.0577	104.92	0.0199	117.98	0.0243	116.12	0.0483	105.42
RAP	0.0027	4.92	0.0018	17.98	0.0034	16.12	0.0025	5.42
Scenario 2
GX	0.4539		0.4574		0.4531		0.4569
GN	0.4102		0.4478		0.4442		0.4121
RE	0.0437		0.0096		0.0089		0.0447
RE/GX	0.0962		0.0210		0.0197		0.0979
DN	0.4095		0.4476		0.4441		0.4096
DT	0.7001		0.6373		0.6040		0.7186
P	0.2462		0.1799		0.1509		0.2617
t	0.1526		0.0517		0.0566		0.1530
VK	0.0443	101.57	0.0098	102.10	0.0090	101.50	0.0473	105.76
RAP	0.0007	1.57	0.0002	2.10	0.0001	1.50	0.0026	5.76

Notes: SLO = Slovenian data and Slovenian parameters; FBH = FBH data and FBH parameters; FBH – SLO = FBH parameters and Slovenian data; SLO – FBH = Slovenian parameters and FBH data; GX = Gini coefficient of pre-tax income; GN = Gini coefficient of after-tax income; RE (redistributive effect) = GX − GN; RE / GX = share of RE in GX; DN = Concentration coefficient of after-tax income; DT = Concentration coefficient of taxes; P = Kakwani index of progressivity; t = average tax rate; VK = vertical effect; RAP = re-ranking effect; VK (% RE) = V as percentage share in RE; RAP (% RE) = RAP as percentage share in RE.

Scenario 1: Pre-tax income = Gross income subject to tax + SSCER (employer SSC); Taxes = SSCER (employer SSC) + SSCEE (employee SSC) + PIT; After tax income = Pre-tax income – SSCER – SSCEE – PIT.

Scenario 2: Pre-tax income = Gross income subject to tax – SSCEE (employee SSC); Taxes = PIT; After tax income = Pre-tax income – PIT.

Source: Taxpayers’ Database for the FBH and Administrative Database for Slovenia; authors’ calculations.

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